He told the Lok Sabha that the bonds can be given only to a registered political party.
"The element of transparency is that the donors who buy these bonds, their balance sheets will reflect they bought these bonds. Political parties will file their returns to the Election Commission and collectively also say this is the extent of bonds we have received.
"Therefore, this will be cleaner money coming from the donor, cleaner money coming into the hands of a political party and there would be a significant amount of transparency," said the minister.
Jaitley said there was no transparency when cash is given as the "source of money is not known, the donor is not known, where it is spent is not known" and that electoral bonds will bring "substantial amount of transparency as against the present system of unclean money and no transparency".
The government's decisions to sharply cut the cash donation a political party can receive and to introduce "electoral bonds" had been announced in the union budget this year.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)