SBI Share Drops on SC Bond Data Order

SBI Share Price Drops After Supreme Court Raps Bank Over Electoral Bond Data

The State Bank of India (SBI) saw its share price fall significantly on Monday after the Supreme Court rejected the bank’s plea for an extension in disclosing data linked to electoral bonds.

Court Rejects Extension, Orders Data Disclosure

A five-judge bench led by Chief Justice D.Y. Chandrachud dismissed SBI’s request to delay the deadline until June 30th. The court had previously set March 6th as the deadline and ordered the Election Commission of India (ECI) to publish the data by March 13th.

SBI argued that the information was readily available, but the court disagreed and directed the bank to disclose all details concerning electoral bonds by the close of business on March 12th.

Share Price Decline

Following the Supreme Court’s verdict, SBI’s shares witnessed a nearly 2% dip. By 3:30 pm, the share price stood at ₹773, a ₹15 drop from the previous day’s closing price. The intraday low reached ₹771, reflecting a 2% decline compared to the prior day.

Market Sentiment and Investor Opportunity

Experts believe the stock market’s overall weakness contributed to the share price decline alongside the court’s decision. They downplayed the long-term impact on the public sector banking sector, suggesting it could present an investment opportunity for those with a medium to long-term view.

Electoral Bond Case in Brief

The Supreme Court is currently hearing a case concerning the transparency of electoral bonds, a method for anonymous political donations in India. The court’s order for data disclosure aims to increase transparency in political funding.

Source.

What is the electoral bond case in India

The Electoral Bond scheme in India is a method of funding political parties that was introduced through the Finance Bill in 2017. It allows individuals and companies to purchase interest-free, tax-exempt bonds from the State Bank of India (SBI) and donate them to a political party of their choice while maintaining complete anonymity. However, the scheme has faced significant scrutiny and legal challenges.


Key Points about Electoral Bonds:

  1. Introduction and Legal Framework:
    – The Electoral Bond Scheme was introduced in 2017 to provide a transparent method of funding political parties.
    – Amendments were made to various acts like the Foreign Contribution Regulation Act, Representation of the People Act, and Income Tax Act to facilitate this scheme.


2. Controversies and Challenges:
– Critics argue that electoral bonds have led to non-transparency in political funding and have been linked to electoral corruption.
– The scheme has been criticized for hindering the public’s right to know about political donations and benefiting certain parties disproportionately.


3. Supreme Court Verdict:
– The Supreme Court declared the Electoral Bond Scheme unconstitutional on February 15, 2024, citing violations of the right to information of voters.
– The court ordered the immediate cessation of issuing electoral bonds and directed the SBI to disclose all bond purchases since April 2019 to the Election Commission within a week.


4. Transparency and Accountability:
– The court’s decision aims to enhance transparency in political funding, allowing voters to know who funds political parties.
– Critics argue that electoral bonds have created a system of secrecy and distorted democracy by favouring certain parties.

The Electoral Bond scheme has been a subject of intense debate due to concerns about transparency, accountability, and its impact on democratic processes in India.

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