Electoral bonds were financial instruments introduced by the Indian government in 2017, designed to allow individuals and corporate entities to donate money to political parties anonymously. These bonds, issued in multiples by the State Bank of India, could be purchased by donors and then given to eligible political parties, which could encash them within 15 days. The stated objective was to promote transparent political funding by ensuring that donations came from legitimate, KYC-compliant sources, thereby reducing the use of black money.

However, electoral bonds largely failed to bring transparency to the political funding system; in fact, they were widely criticized for doing the opposite. The key issue was the anonymity of the donor to the public. While the government and the issuing bank knew the donor's identity, this information was withheld from the public and opposition parties. This opacity made it impossible for citizens to know who was funding which political party, fostering concerns about quid pro quo arrangements, crony capitalism, and undue corporate influence on policy-making. Critics argued that the scheme created an uneven playing field, potentially favoring the ruling party which could access donor information. The Supreme Court of India, in February 2024, struck down the electoral bond scheme as unconstitutional, citing its violation of citizens' right to information and free speech, and asserting that it undermined electoral transparency. Thus, electoral bonds proved to be a mechanism that facilitated opaque political funding rather than promoting transparency.