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The Finance Ministry has admitted that Reserve Bank of India had raised some concerns on the electoral bonds.
In a written reply, Finance Minister Nirmala Sitharaman told the Rajya Sabha that the then RBI Governor, Urjit Patel, had raised some concerns on the electoral bonds.
Sitharaman said, “The Governor, Reserve Bank of India, in his letters dated September 14 and September 27, 2017, raised certain concerns against the issue of electoral bonds. These reasons focused on the aspects of the platform for issuance and possible risks of a bearer bond and were reflective of the Reserve Bank of India’s conservative positioning.”
The electoral bond is a bearer instrument (which authorises the holder to encash) in the nature of a Promissory Note and an interest-free banking instrument. Such an instrument provides anonymity to the purchaser as well as donors, but at the same time establishes a transparent political funding system. The anonymity is being ensured to promote use of white money for political donations through the route of electoral bond. An Indian citizen or a body incorporated in India is eligible to purchase the bond.
To the question why the Ministry took such a step inspite of the RBI’s disapproval, the Minister listed two reasons: First was to protect the identity of the donor and the second was to ensure wider coverage of the scheme.
The RBI had suggested issuance of bonds in electronic (Demat) format only. With the bond holders sharing unique identifier with the political party, it may take away a key feature of the scheme, which is to protect the identity of the donor from the political parties. The donors may apprehend that the system may not be able to ensure secrecy of their identity, the Minister said.
Physical scrips, according to her, will help in popularising the bonds and cover people of all strata of the society. Small donors may not be familiar and comfortable with the digital processing and would like to get a physical bond. She also said that RBI was involved in extensive consultations with the government at the stage of conceptualisation. The Committee of the Central Board (CCB) of the RBI, in its meeting held on October 11, 2017, indirectly agreed for electoral bonds to be issued if issued by SBI.
Raising deposit insurance
In a written reply to another question, Minister of State for Finance Anurag Singh Thakur told the Upper House that a RBI committee headed by former SEBI Chief M Damodaran recommended insurance deposit cover to be raised to ₹5 lakh from ₹1 lakh.
The Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank of India (RBI), provides insurance for bank deposits.
He also said since the inception of deposit insurance, the total premium paid by commercial banks is ₹88,523 crore and the total payout to depositors of failed commercial banks on account of claims is ₹296 crore.
MUDRA loan
On a question on MUDRA, Thakur said, as of October 2019, 20.65 crore loans have been extended under the Pradhan Mantri Mudra Yojana (PMMY) since its inception. This involves disbursement of nearly ₹10 lakh crore.
While borrowers under general category account for nearly 65 per cent of total disbursement, shares of OBC, SC and ST are 21.3 per cent, 10.2 per cent and 3.4 per cent respectively.
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