Why did SBI accept expired bonds?

All this week, HuffPost India published the #PaisaPolitics series by senior journalist Nitin Sethi, which looked at how the Narendra Modi government ignored opposition by the RBI and Election Commission and broke rules in its rush to introduce and implement electoral bonds, a secretive way of funding political parties.

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In the latest part, published on Friday, Sethi found that in May 2018, SBI—the bank tasked with stewarding the scheme—accepted 'expired' electoral bonds worth Rs 10 crore after getting a sign-off from the finance ministry.

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Why is this important? The government has claimed for a long time (most recently yesterday) that electoral bonds can only be encashed by political parties within 15 days of their being bought. But now we know that at least once, and at a very crucial time, this rule was broken by the finance ministry.

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This allowed anonymous donors to donate money to an unidentified political party, or parties, soon after the Karnataka state elections that resulted in a hung assembly.

How did this happen?

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According to the documents, bond holders carrying Rs10 crore worth of bonds bought on 5 May 2018 approached SBI’s main Delhi branch on 23 May, asking that they be allowed to encash the bonds anyway, arguing that the 15-day limit referred to working days, not calendar dates.The next day, the bank's deputy managing director wrote to the finance ministry for advice. The government wrote back the same day, clarifying that the limit indeed referred to calendar dates. But that wasn't all.

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The letter added that "as some amount of lack of complete clarity may have been witnessed in the bonds issue in last windows", the bank could bend the rules for bonds bought before 10 May 2018, and accept them within 15 working days. So, the party, or parties, got Rs 10 crore the same day. So we know that the 15-day time limit rule was interpreted arbitrarily by the govt at least once. Now, the timing.

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What about the timing?

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In Part 3 of the series, HuffPost India had revealed that the 1-10 May 2018 bond sale window had been opened illegally on the PMO's instructions.

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So not only were donors allowed, against the rules, to buy bonds just ahead of crucial assembly elections in Karnataka, the recipient(s) was/were allowed to encash it on 24 May 2018, soon after the election results threw up a hung assembly.

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“Which party was done this favour with such alacrity and speed?” asks Commodore Lokesh Batra (Retd.), the activist who unearthed these documents.

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What else?

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We already know 95% of the money gathered in the first tranche of such bonds had gone to the BJP, according to data compiled by the Association for Democratic Reforms. On Friday, The Indian Express reported that electoral bonds with the highest denomination of Rs 1 crore accounted for more than 91% of the Rs 5,896 crore raised through the first 11 phases sold between 1 March, 2018 and 24 July, 2019.

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Meaning: it’s the rich that truly love electoral bonds.

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If you haven’t yet…

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Catch up on the rest of the series here:

Part 1: Modi Govt Overruled RBI’s Objections Within Hours

Part 2: FinMin Officials Misled EC On The Scheme, Helped Govt Lie To Parliament

Part 3: PMO Asked FinMin To Open An Illegal Sale Window Just Before Vital State Polls

Part 4: No, Electoral Bonds Aren’t Completely Anonymous

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Read the entire series here:https://www.huffingtonpost.in/news/paisapolitics/