Centre Told SBI to Accept Expired Electoral Bonds: Report

These bonds were sold in an extra window that the PMO asked for, going against the government's notified rules.

New Delhi: In the aftermath of the Karnataka assembly elections in 2018, the Ministry of Finance reportedly broke rules and allowed expired electoral bonds worth Rs 10 crore to be donated to an unidentified political party.

According to a report in HuffPost India – part of a series reported by Nitin Sethi based on documents accessed by right to information activist Commodore Lokesh Batra (retired) – the political party/parties holding the bonds asked the State Bank of India (SBI) to accept expired bonds. The SBI wrote to the finance ministry saying that on Mat 23, 2018, some “EB holders” with bonds worth Rs 20 crore which had lapsed. Half of these electoral bonds had been bought on May 3, 2018 and the other half on May 5, 2018.

These bonds were bought during an “extra” window for the sale of electoral bonds which the Prime Minister’s Office had asked for – even though no such extra window is allowed for in the regulations notified by the Centre.

Also read: How Finance Ministry Decided RBI’s Dissent on Electoral Bonds Meant ‘Indirect’ Approval

According to the government’s regulations on electoral bonds, they must be deposited with the bank within 15 calendar days of being issued. If a bond lapses, the money is to be donated to the Prime Minister’s National relief Fund. The bond holders in question – representative(s) of a political party/parties – had brought lapsed bonds to the SBI to deposit.

According to HuffPost India, the bond holders had asked the bank to accept the lapsed bonds because they had been deposited within 15 working days – though the rules say calendar days. The head of the New Delhi branch (where the representatives had taken the bonds) then wrote to on behalf of SBI chairman Rajnish Kumar to the finance ministry, asking if these electoral bonds should be accepted.

The same day, an official from the ministry responded to the bank, Sethi reports. Vijay Kumar, deputy director in the Department of Economic Affairs, clarified that the rules said calendar days and not working days, and so the bonds had lapsed. But he was willing to make an exception.

“As some amount of lack of complete clarity may have been witnessed in the bonds issue in last windows, SBI may grant credit to such bond holders of bond purchased before 10th May, 2018 if the bonds were deposited in 15 working days. No such accommodation will be available in future,” Kumar wrote to the SBI.

The letter was approved by S.C. Garg, secretary in the Department of Economic Affairs.

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This meant that bonds bought on May 5, 2018 could be deposited, while those bought on May 3, 2018 went to the Prime Minister’s National Relief Fund.

A number of reports in the last few days have brought into question the ruling party’s use of the electoral bonds scheme, which has been widely criticised for making political funding more opaque. Both the Reserve Bank of India and the Election Commission had asked the Modi government not to go through with the scheme.