Electoral Bonds Theory and Concepts for RBI Grade B Exam

By Gaurav Tripathi|Updated : May 11th, 2022

Financial Management is an important topic asked under RBI Grade B exam   in Phase 2 . This section covers a total of 100 marks. Mastering Financial Management is at times, tough for many students because it involves lots and lots of theoretical concepts.

 

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So, for your ease and better preparation, we are going to discuss an important topic today which is Electoral Bonds which has constantly remained in news and hence becomes important for RBI Grade B. Get ready to master Finance & Management & score better in RBI Grade B exam.

Table of Content

Electoral Bonds

In order to “cleanse the system of political funding in the country” and in keeping with the government’s desire to move to a cashless economy, Union Finance Minister introduced an electoral bonds scheme. The scheme was announced during the 2017 Budget, which aims to account for the donations made to all major political parties.

Electoral bonds, which were introduced with the Finance Bill 2017, are instruments/securities that are used to give funding to political parties. In the year 2018, the Electoral Bonds were announced. These bonds are similar to bearer bonds or promissory notes in that the issuer (bank) serves as the custodian and pays the bondholder (political party).

The concept of electoral bonds is an important topic with respect to RBI Grade B exam

You must check the RBI Grade B exam previous year papers to know the exam level and types of questions asked from this chapter.                                        

What is Electoral Bonds?

An electoral bond is designed to be a bearer instrument like a Promissory Note — in effect, it will be similar to a banknote that is payable to the bearer on demand and free of interest. It can be purchased by any citizen of India or a body incorporated in India.

Why it is in News?

The first sale of electoral bonds will start from March 1, 2018, for a period of 10 days at four main branches of the State Bank of India in Mumbai, Chennai Kolkata, and New Delhi. These bonds will have a life of 15 days, and citizens of India or an entity incorporated or established in the country can purchase them.

Electoral Bonds Characteristics and Processes Involved

These are characteristics which are important to keep in mind from the exam point of view:  

  • Notified banks are the issuers of these bonds.
  • These banks may be approached by the donor to purchase the bonds.
  • The donor will be able to purchase the bonds using a check or a digital payment. As a result, the contributors' identities are shielded (if the donors are identified, they may get caught up in political rivalry-especially if the donor is a businessman).
  • These bonds are given to the political party by the donor.
  • The political party must deposit the money into an account with the Election Commission of India. 

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How do You Use It?

The procedure is simplified and straight-forward. A person can donate to a party and check the details through online process. The following steps explain the procedure:

  • The bonds will be issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, and Rs. 1 crore and will be available at specified branches of the State Bank of India. They can be bought by the donor with a KYC-compliant account.
  • Donors can donate the bonds to their party of choice which can then be cashed in via the party's verified account within 15 days.

You should check the required RBI Grade B exam book to study this chapter for the upcoming RBI Grade B 2022 exam.

What are the Other Conditions?

There different provisions mentioned in this rule which is to be followed by all the political parties. This to ensure a level playing field to all the participating political parties. These are: 

  • Every party that is registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and has secured at least one percent of the votes polled in the most recent Lok Sabha or State election will be allotted a verified account by the Election Commission of India. Electoral bond transactions can be made only via this account.
  • The bonds will be available for purchase for a period of 10 days each at the beginning of every quarter, i.e. in January, April, July, and October as specified by the Central Government. An additional period of 30 days shall be specified by the Central Government in the year of Lok Sabha elections.
  • The electoral bonds will not bear the name of the donor. In essence, the donor and the party details will be available with the bank, but the political party might not be aware of who the donor is. The intention is to ensure that all the donations made to a party will be accounted for in the balance sheets without exposing the donor details to the public.


To watch concept classes and chapter-wise sessions by exam-qualified experts, you can try our RBI Grade B exam Online Coaching.
                                                                 

Will Electoral Bonds be Tax-Deductible?

Yes, electoral bond is an effort made to cleanse the system of political funding in India. These transactions would be under the purview of tax exemptions.

  • During the Budget presentation in February 2018, the Finance Minister had proposed that the maximum amount of cash donation that a political party can receive be capped at Rs. 2,000 and that parties are entitled to receive donations by cheque or digital mode, in addition to electoral bonds.
  • In a press conference that followed, he added that donations would be tax-deductible. “A donor will get a deduction and the recipient, or the political party will get tax exemption, provided returns are filed by the political party,”.

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Comments

write a comment
Ranjana Choudhary
Mam yesterday you posted an article for preci writing.
I posted answer in the same article but you didn't respond. How will I know where to improve
Mam plz respond
Ekta Gupta

Ekta GuptaMar 13, 2018

@Priyanshu Maheshwari mam... Book of uma  kapila 2018 edition,
Is that okay for RBI GRADE B
Do reply plz🙏🙏
Sudhanshu Jha
What should be the optional subject for a non commerce background student? ?
Shalini

ShaliniMar 13, 2018

Thanks mam🙏🙏
Parveen Singh
Does it provide a legal way to convert black money into white?
Prabhjot Kaur
👍👍👍

FAQs

  • You can practice Electoral Bond-related MCQs for the RBI Grade B exam online. We have daily quizzes on app for RBI Grade B exam where you will be able to assess yourself with respect to different topics.

  • Electoral Bonds, which were introduced with the Finance Bill (2017), allow donors to finance political parties through banks. Only the State Bank of India has the authority to issue these bonds. A bond's value ranges from Rs 1000 to Rs 1 crore. Moreover, as elections are an ongoing process , this topic is regularly appearing in the current affairs. You must understand this topic, comprehensively.

  • Financial Management is an important topic asked under RBI Grade B exam in Phase 2. This section covers a total of 100 marks. This is one of the most important papers in RBI Grade B exam as the marks gained in this paper are calculated for final ranking in the merit list.

  • It is common knowledge that the Finance and Management is one of the most challenging subjects to score high marks. However, the good news is that with the right preparation strategy you can pass this exam successfully despite the immense competition.

  • Solve the mock tests and analyze them and devote sufficient time to that analysis. Look after the previous years question papers for RBI Grade B exam. Remember that apart from subject knowledge, your time management skills play an important role.

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Regulatory Bodies

Regulatory ExamsRBI Grade BSEBI Grade AFCISIDBINABARDUPSC EPFO
tags :Regulatory BodiesFinance and ManagementRBI Grade B OverviewRBI Grade B Admit CardRBI Grade B SyllabusRBI Grade B Exam AnalysisRBI Grade B Cut Off

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