Electoral Bonds: Did Supreme Court fall into SBI's trap by waiving matching requirement?

Ever since the five-judge Constitution bench nullified the Centre's electoral bonds scheme, which permitted anonymous political funding, the Supreme Court of India has been pressuring the State Bank of India (SBI) to disclose details regarding bonds.

However, was the court's decision to eliminate the matching requirement a misstep? Will voters be deprived of crucial information about the interest groups funding political parties before they cast their votes?

When senior advocate Harish Salve, representing the SBI, highlighted the difficulty and time-consuming nature of matching donors with beneficiary political parties during the hearing of the case, the Supreme Court instructed the bank to provide separate lists: one detailing all donors and the bonds they purchased, and another listing the amounts each political party received in different tranches.

"The bank is no longer obligated to disclose who made payments to specific political parties. Even if we purchase an electoral bond, it will remain unknown whether we donated it to the BJP or Congress. As per my interpretation of the judgment, the Supreme Court did not specifically require the SBI to reveal the secret serial numbers on each electoral bond. With the serial numbers, matching donors to beneficiaries would be a matter of minutes," says Nitin Sethi, senior journalist and founder Editor of 'The Reporters Collective', whose work has been presented before the Supreme Court by the petitioners, leading to the judgment scrapping the bonds. He was speaking on Onmanorama's Explainer podcast News Brake.

Interestingly, reports suggest that the SBI advocated for a method to maintain an audit trail for each electoral bond sold and purchased. This contradicts the bank's claim that due to stringent measures to ensure donor anonymity, decoding the bonds and matching donors to donations would be complex. The bank had asserted before the top court that donor details were sealed at designated branches and deposited in the main branch in Mumbai.

On Wednesday, following the SC's directive, SBI provided electoral bond details to the Election Commission, including purchaser names, purchase dates, bond denominations, encashment dates, and names of political parties that received contributions. Out of 22,217 electoral bonds purchased between April 2019 and February 2022, 22,030 were redeemed by political parties.

According to Sethi, the absence of serial numbers makes it challenging to accurately determine donors to political parties in the last 3-4 years. "In some cases, it might be possible to make generic predictions. For instance, if a large percentage of bonds was bought by a single entity within a short period, and a significant portion went to one political party, one could reasonably infer the source and recipient. However, this would not be conclusive."

Sethi argues that the court, perhaps inadvertently, fell for Salve's strategy by denying citizens the right to know actual donors. While the original Supreme Court order emphasised citizens' right to know which corporations funded which parties, Sethi believes the court missed the mark by withholding that right in the March 11 order.

"Electoral bonds function akin to two-ended instruments like self-cheques. Without serial numbers provided by the SBI, it becomes challenging to ascertain the contributors and their respective amounts allocated to each political party. Matching could also occur if the bank offers the necessary mapping or audit trail for these bonds," explained Digital Lending and Fintech Expert Parijat Garg to Onmanorama.

"Corporates were previously mandated to disclose their involvement in political funding. However, this requirement was eliminated in the 2017 Finance Bill. Additionally, the cap on political funding was also lifted. Consequently, there was no mechanism to monitor who was funding whom. Therefore, the Supreme Court sought to bring clarity on this matter," he said.

It remains to be seen if the court will mandate the matching exercise in future hearings. The Election Commission is expected to incorporate the details provided by SBI into its platform on March 15.