New Delhi: Union finance minister Arun Jaitley on Sunday said the government’s electoral bonds scheme marks a substantial improvement in transparency over the present opaque system of political funding.

“The electoral bond scheme, which I placed before the Parliament a few days ago, envisages total clean money and substantial transparency coming into the system of political funding," Jaitley wrote on Facebook.

“A bond can only be encashed in a pre-declared account of a political party. Every political party in its returns will have to disclose the amount of donations it has received through electoral bonds to the Election Commission. The entire transactions would be through banking instruments."

Jaitley said a donor can purchase electoral bonds from a specified bank and would have to disclose in his accounts the amount of political bonds that he had purchased.

“The Government is willing to consider all suggestions to further strengthen the cleansing of political funding in India. It has to be borne in mind that impractical suggestions will not improve the cash-denominated system. They would only consolidate it," he added.

Jaitley said that in the present system of cash donations, the donor, the donee, the size of donations and the nature of expenditure are all undisclosed.

“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 wrote in his post.

The scheme was initially announced by the government in the 2017 Union Budget. Through the scheme, interest-free electoral bonds can be bought from specified branches of State Bank of India in multiples of Rs1,000, Rs1 lakh, Rs10 lakh or Rs1 crore.

The life of the electoral bonds will be 15 days and they can be encashed only by registered political parties through a designated bank account. These bonds will be available for purchase for 10 days each in the months of January, April, July and October and an additional 30-day period will be specified by the central government in the year of general elections.