The electoral bonds are being pitched as an alternative to cash donations made to political parties.

Stressing that the electoral bond scheme is a “substantial improvement” in transparency over the present political funding system, Union Finance Minister Arun Jaitley on Sunday said the government is open to suggestions to further cleanse the process.

Mr. Jaitley said in a Facebook post that India had not been able to evolve a transparent political funding system, despite being the largest democracy and strengthening institutions for the last seven decades.

“The conventional practice of funding the political system was to take donations in cash and undertake these expenditures in cash. The sources are anonymous or pseudonymous. The quantum of money was never disclosed. The present system ensures unclean money coming from unidentifiable sources. It is a wholly non-transparent system,” he said.

“I do believe that donations made online or through cheques remain an ideal method of donating to political parties. However, these have not become very popular in India since they involve disclosure of donor’s identity,” he said.

The electoral bond scheme, Mr. Jaitley said, envisages total clean money.

A donor can purchase electoral bonds from a specified bank only by a banking instrument. He would have to disclose in his accounts the amount of political bonds that he has purchased.

The life of the bond would be only 15 days and it can be encashed only in a pre-declared account of a political party.

Every party in its returns will have to disclose the amount of donations it has received through electoral bonds to the Election Commission.

As against total non-transparency in the present system of cash donations, some element of transparency would be introduced.