The Supreme Court on Thursday struck down the electoral bond program, which allows donors to anonymously purchase electoral bonds and send funds to a political party.

The top court termed the plan introduced by the BJP-led central government as “unconstitutional” and directed the State Bank of India (SBI) to stop issuing electoral bonds with immediate effect.

The top court has directed state-run SBI to hand over the records of electoral bonds issued in the past to the Election Commission of India (ECI).

SBI has been asked to release details of the political parties that have received electoral bonds and all the details received and submit the same to ECI by March 6. SBI will submit the purchase details of the bonds with the purchase date, buyer's name and denomination along with the order says.

The Election Commission of India has been directed to publish these details on its website by March 13, 2024.

A five-member Constitutional Bench comprising Chief Justice of India (CJI) DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra delivered the verdict.

The electoral bond program was previously criticized for possible quid pro quo, as the program allowed companies to secretly fund political parties.

“Information about corporate donations through electoral bonds must be disclosed because corporate donations are solely for quid pro quo purposes,” the Supreme Court says.

The Supreme Court ruled that the electoral bond system violated the right to information under Article 19(1)(a) of the Constitution due to its anonymity.

Electoral bonds were introduced by the Finance Act, 2017 by amending the RBI Act, the Income Tax Act and the Representation of People Act.

Former Reserve Bank of India governor Raghuram Rajan last year criticized the electoral bond scheme, saying it was worse than cash in politics because the only person who knew about the donations was the SBI. “How much is kept secret in India? That's the question I want to ask. How much does the government know who gave to whom, which makes it an unequal form of funding because the government can always call the people who gave to the opposition and say why you gave them,” he said Rajan in an interview last year.

“I worry that the ruling party is getting an unfair advantage because it is opaque and secrecy is not as strict in India. The opposition will have to use dirty money. At the time of the election you attack the opposition. How are elections fought? They are fought with money,” Rajan said.

While the incumbent parties can finance themselves with checks, the opposition has to deal with wads of cash, Rajan said, adding that this is not a fair electoral process. Fundamentally, in a democracy, not knowing who is funding whom is a disruption to the process, he added.