Electoral bonds are a type of financial instrument used for making donations to political parties in India. They function like promissory notes and are interest-free banking tools. Any Indian citizen or organization registered in India can buy these bonds after fulfilling the KYC norms laid down by the RBI. The bonds can be procured by a donor solely through the means of cheque or digital payments in various denominations, such as one thousand, ten thousand, one lakh, ten lakh, and one crore from specific branches of the State Bank of India (SBI) . The bonds are payable to the bearer on demand and can be donated to any eligible political party of the donors choice.

The main features of electoral bonds are:

• Only political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the Electoral Bonds.
• The Electoral Bonds shall be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.
• State Bank of India has been authorized to issue and encash Electoral Bonds through its 29 Authorized Branches.
• The bond shall be valid for fifteen calendar days from the date of issue and no payment shall be made to any payee Political Party if the Electoral Bond is deposited after the expiry of the validity period.

Electoral bonds have been controversial in India, with concerns raised about transparency and accountability in political funding.