Electoral Bonds: BJP Spokesperson Says RBI 'Possibly Did Not Understand It'

In its first public response to the revelations made in HuffPost India’s investigative series into the electoral bond scheme, BJP’s national spokesperson said the Reserve Bank of India (RBI) “possibly did not understand” the full contours of the scheme.

GVL Narasimha Rao was responding to senior journalist and India Today anchor Rajdeep Sardesai, who asked Rao about the objections raised by the RBI and the Election Commission to the electoral bond scheme.

“I’m touched by your faith in the RBI and the Congress party’s faith in the RBI. Even the RBI possibly did not understand it. How can it be money laundering? If you have tax-paid money in your account and you buy a bearer instrument with the money from your account, how does it become money laundering? I have to break my head to understand such logic,” he said.

Read why the RBI  and Election Commission  opposed electoral bonds. 

Rao also claimed that allegations of illegality in the electoral scheme were a “fake narrative”.  

“This is a fake narrative being promoted by failed politicians, political parties and some failed activists,” he said on the TV show. 

“Because this is the system that has ensured that the money that comes into political parties is clean money and not dirty money. If 95% of the clean money has come into the BJP, I’m proud of it,” Rao said.

Thus far, electoral bonds worth at least Rs 6,000 crore have been sold since March 2018. Of the first tranche, worth Rs 222 crore, the BJP has garnered 95% of the money according to data compiled by the Association for Democratic Reforms.

In his investigation for HuffPost India , journalist Nitin Sethi wrote that both the RBI and the Election Commission  had raised strong objections to the government’s electoral bond scheme. His exclusive report on Wednesday showed how Prime Minister Modi’s office had asked the finance ministry to break its own rules  to allow for the illegal sale of electoral bonds just ahead of a crucial assembly election in Karnataka.

The first part of the series had shown how the government made a show of asking the RBI for its views on electoral bonds, only to instantly dismiss its objections and announce the scheme in Parliament. 

The RBI had said electoral bonds and the amendment to the RBI Act would set a “bad precedent” by encouraging money laundering and undermining faith in Indian banknotes, and would erode a core principle of central banking legislation, Sethi reported.

On this, Rao said, “It (RBI) has not understood this provision. That’s what the revenue secretary wrote on the file. Maybe they thought this might run into lakhs of crores and people high buy these instruments and keep them for months or years together. But that’s not the case. They can buy this instrument but it has to be used within 15 days. So there is no question of anyone trying to launder money — if you’re laundering money from your tax paid account, I don’t think that can be called money laundering.”

The second part  of the HuffPost India investigation had revealed how the government had dismissed the Election Commission of India ’s opposition to electoral bonds , lied to the Parliament and then resorted to a hurried cover-up when its mis-statements were caught out.

Rao did not directly address this. Instead, he claimed that money paid to political parties through electoral bonds—a notariously opaque instrument that allows corporations and other legal entities to anonymously funnel unlimited amounts—“cannot be unclean money”.

“Any company, any entity that buys the bonds has to have an account for which all details are available with the banker. Three lakh shell companies have been dumped in this country for the same purpose. So these can’t be shell companies. This is tax-paid money,” he said.

But as the first part of the series showed, the RBI’s suggestion that only those holding accounts with banks that are fully verified under the Know Your Customer norms should be allowed to buy these bonds was dismissed by the government.