In a ground-breaking decision that reverberates through the corridors of political power, the Supreme Court has dealt a significant blow to the electoral financing system in India by ruling electoral bonds unconstitutional. This landmark verdict marks a pivotal moment in the ongoing debate surrounding transparency and accountability in political funding.

Electoral bonds, introduced in 2018 ostensibly to bring transparency to political donations, have been met with scepticism and criticism, with concerns raised about their potential to facilitate anonymous, opaque funding channels. Now, with the highest court's pronouncement, the landscape of political finance undergoes a seismic shift, promising profound implications for the future of democracy and governance in the country.

India is the largest democracy, elections are held every five years, to win these elections political parties spends heavily for campaigning. These funds are raised by donations. Other big countries have similar system but with more transparency. These funds are donated by the citizens for their favourable political party. This donation is later gets transferred into the party fund. Often time this donated money was given in cash, which is a big loophole for black money and money laundering.

To avoid this Electoral Bonds were introduced in 2018. State Bank of India is the only institution that can generate electoral bond. A person can visit some certain branches of the bank and can buy these electoral bonds. Later submit it to the party's office and then the party can redeem it and withdraw the money.

These bonds are available for 15 days only. If the party doesn't redeem it in time then the money gets transferred into the PM Care Fund. SBI has all the details about the buying and cashing in of the electoral bonds. Also KYC is mandatory for the purchase of the bond. The total bonds purchased and redeemed from 2018-19 to 2021-22 is a whopping Rs 9,283 crore. In which Rs 5217 crore went to BJP.

Association of Democratic Reforms (ADR) filed case in Supreme court against this. Election commission also raised issues against this. Main arguments against this was that in 2018 the conditions to donate not more than 7.5% of profits and not more then 10% of the revenue, were waived off. Even loss making companies can also donate any amount that they want. This was the biggest concern of the supreme court also that how can a loss making company can donate. This clearly opens a way for money laundering. Even shell companies can also donate. There is no upper limit on the amount donated.

The bench, headed by chief justice of India DY Chandrachud, and comprising Justices Sanjiv Khanna, B R Gavai, J B Pardiwala, and Manoj Misra, delivered two separate and unanimous verdicts on the pleas challenging the scheme.

Supreme court also directed SBI to submit data of all electoral bonds from 2018 till now to ECI till 13 March 2024.