In 2017, the government proposed the bonds as a transparent way for political funding. A petition by the Association of Democratic Reforms asks for the system to be stopped or for the donors to be disclosed for the sake of transparency in the poll process.

Prime Minister Narendra Modi's BJP has received most of the funds flowing through the bonds, according to a court filing by the Election Commission.

"We have considered the matter. We examined the stand by the Election Commission. For the present, it needs hearing and it can't be concluded in a short span of time. The court has to ensure interim arrangement and should not tilt in favour of any party," said a three-judge bench headed by Chief Justice Ranjan Gogoi.

The court also directed the finance ministry to reduce the window of the purchase of electoral bonds from 10 days to five in April-May, the period during which staggered national elections are being held.

On Thursday, the Supreme Court had said if the identity of donors buying electoral funds was not known, the government's efforts to check black money in polls would be futile.

The government vehemently defended the scheme, saying that its purpose was to eliminate the use of black or untaxed money in elections. The court, it said, cannot interfere with the system at this stage and should examine it only after the elections.

"Do not let transparency kill the electoral bond scheme," said KK Venugopal, the government's lawyer, backing anonymity of the buyer and the redeemer of electoral bonds.

Mr Venugopal said the bank knows the customer but it does not know which bond was issued to which party. Anonymity needs to be maintained for reasons that include fear of repercussions if the rival party or group wins, the government said. "It is not voters' concern to know where the money comes from. Transparency cannot be looked as a ''mantra''. What are the realities of the country? This is a scheme that will eliminate black money from the elections," said Mr Venugopal.

The electoral bond scheme, notified in January last year, allows the purchase of electoral bonds that a political party can receive and redeem through a bank account. The bonds can be bought at a bank in denominations ranging from Rs. 1,000 to Rs. 10 million, and given to a political party, which can encash them.