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The Quint recently revealed that electoral bonds have an invisible tracking number that is visible with “fluorescence when examined under Ultra Violet (UV) Light”.
SBI reportedly issued a statement that the number was merely a tracking feature, that “the bank will not have any record of the above number either for the donor or political party”, and that the number would only maintain the “count of denomination-wise bonds issued and paid”. The bank also clarified that its capacity to share these details was limited by purpose restrictions imposed in KYC and Anti-Money Laundering norms.
That electoral bonds carry a serial number and cannot of itself invite adverse inferences as to the Government’s desire to surveil donors to particular political parties.
Electoral bonds are bearer bonds, as per the Ministry of Finance notification which set out the scheme. This means that the bonds cannot indicate the name of either the buyer or the payee. With there being no definitive and pre-determined owner or payee against each bond, the need for serial numbers on electoral bonds is plausible.
For one, an authorised issuer of bearer bonds needs a mechanism by which to count how many authentic bearer bonds have been printed, that can likely go into circulation. Without serial numbers that record the count of authentic bearer bonds printed by authorised banks, counterfeits can easily be printed and circulated, with the aid of bad actors in banks, to the detriment of both buyers and payees.
Without any count of authentic bonds, one wonders how bonds suspected to be counterfeits would be detected. Likewise, without serial numbers to identify bonds, one wonders how detected counterfeits can be withdrawn from circulation. These might be some reasons why a mere watermark, or a number visible without UV light and to the naked eye, might have been thought to be inadequate security features.
But does this mean we shouldn’t be concerned?
This is not to say that the critiques as to the opacity of electoral bonds are any less valid. The imperatives driving political funding regulation are many.
However, it is in pursuit of the third imperative, that the government has mandated anonymity for political donations, leaving political parties unable to disclose the source of their donations, and freeing donors of the obligation to disclose their party-wise donations.
While SBI might be legally barred from revealing the identity of donors buying electoral bonds, it is also bound by furnishing norms prescribed under the Prevention of Money Laundering Act 2002 (PMLA).
There exists no legal bar on the government accessing information as to the identity of political donors. On the contrary, the central government is empowered to, “in consultation with the Reserve Bank of India, prescribe the procedure and the manner of maintaining and furnishing information…for the purpose of implementing the provisions of this Act” (Section 15).
Likewise, the State Bank of India is legally required to be guided by “directions in matters of policy involving public interest as the Central Government may, in consultation with the Governor of the Reserve Bank and the chairman of the State Bank, give to it”.
If any question arises “whether a direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final.” Therefore, the central government has full discretion to determine the policy directions it will impose on the State Bank of India, in public interest, which could therefore conceivably include requiring information of the identity of donors.
Indeed, what is noticeable in the batch of amendments that created legislative basis for electoral bonds, is the absence of a purpose restriction that delineates the purposes for which the identity of political donors may be accessed by the central government.
In short, were the government inclined to track and identify donors to political parties, it could employ any number of legal ways to achieve its ends, without resorting to an invisible tracking number. The bigger issue with the mandatory anonymity of electoral bonds is the opacity that will facilitate quid pro quo concessions to be made by political parties to donors.
(Inputs by Murali Murthy, Mayur Murthy and Ishan Gupta.)
(The writer is a Bangalore-based lawyer, currently working on teaching democracy and active citizenship through experiential learning. She can be reached at @MaLawdy. This is an opinion piece and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)
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Published: 14 Apr 2018,10:44 PM IST