Who made SBI accept expired electoral bonds sold in illegal window? Answer is, Modi government

electoral bonds

In the fifth part of its #PaisaPolitics story, HuffPost India has exposed that the Finance Ministry violated an anti-money laundering rule by allowing expired electoral bonds worth Rs. 10 crore to be donated to an unidentified political party, or parties, soon after the May 2018 Karnataka state elections resulted in a hung assembly.

Documents reviewed by HuffPost India show that political parties i.e. holders of these bonds, asked the State Bank of India (SBI), the only bank tasked with carrying out the electoral bonds scheme, to accept the expired bonds.

Not just this, the Prime Minister’s Office (PMO)  had illegally directed the Finance Ministry to break rules by opening a “special” 10-day window for them days before Karnataka went to polls, HuffPost India reported.

As per rules published by the Finance Ministry in January 2018, SBI would sell bonds only 4 times a year (with a provision for 30 additional days in general election years) and would have to be redeemed within 15 days of the date of purchase. So, this window was “specially” opened after violating this rule.

Let’s understand it in detail:

  • According to a report sent by SBI to the Finance Ministry, some bonds worth Rs. 20 crore were sent to the main branch of SBI in New Delhi on Mar 23, 2018.
  • Half the bonds were bought on Mar 3, 2018 and the other half on May 5, 2018. These bonds were bought during the “special window” opened May 1 to May 10, 2018 at the direction of the PMO.
  • In its report, SBI mentioned that the bonds had expired as their 15 calendar-day period of redemption had lapsed. As per rules, The bonds must be deposited by the recipient political party within 15 days of purchase.
  • SBI’s corporate headquarters were also intimated of the same on the very same day.

Also read: Electoral bonds: Modi Govt lied when it said donations will be anonymous

  • On May 24, 2018, SBI’s then deputy managing director, Mrutyunjay Mahapatra, wrote on behalf of SBI Chairman Rajnish Kumar to the Finance Ministry, asking whether they should allow the redemption of these expired bonds.
  • “A few of the holders have approached us with the interpretation that these are valid for 15 working days. We request you to clarify the matter as to whether as on the date of receipt of the bonds at our counters, 15 working days or 15 calendar days are to be counted as validity period,” Mahapatra asked in the letter.
  • The Finance Ministry was quick to respond. “This is clarified that the stipulation means a total of 15 days, including non-working days in between. As some amount of lack of complete clarity may have been witnessed in the bonds issue in last windows, SBI may grant credit to such bondholders of bond purchased before 10th May, 2018 if the bonds were deposited in 15 working days. No such accommodation will be available in future,” Vijay Kumar, deputy director in the economic affairs ministry, said in his response, instructing the SBI to accept the expired bonds.
  • It is clear by the dates that the bonds were deposited after 15 days of their purchase, and as per rules, they were supposed to be donated to the Prime Minister’s National Relief Fund and used for charitable works. However, they were allowed to be donated to the political parties, despite getting expired.
  • Kumar’s letter was approved by S.C. Garg, the secretary of the department of economic affairs, and the response was sent to the SBI chairman on that very day.
  • SBI’s New Delhi branch was informed by the bank’s headquarters and before the day was even over, the political party, or parties, involved were allowed to redeem the bonds bought on May 5, 2018.
  • However, the other half bonds worth Rs. 10 crore, which were bought on May 3, 2018 were sent to the PM’s relief fund.
  • “Which party was done this favour with such alacrity and speed?” Commodore Lokesh Batra (Retd.), the transparency activist who unearthed these documents, said in an interview with HuffPost India.

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