Kathmandu: India’s Supreme Court has scrapped a seven year-old election funding system, called ‘electoral bonds’  that allows individuals and companies to donate money to political parties anonymously and without any limits.

Thursday’s decision is seen as a setback for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP), which has been the largest beneficiary of the system it introduced in 2017.

The secretive election funding system was challenged by opposition members and a civil society group on grounds that it hindered the public’s right to know who had given money to political parties.

Under the system, a person or company can buy these bonds from the state-run State Bank of India (SBI) and donate them to a political party of their choice.

A five-judge top court bench headed by Chief Justice D Y Chandrachud said the system is “unconstitutional” and directed the SBI to not issue any more of these bonds.

“The Supreme Court has struck down the electoral bond scheme and all the provisions that were made to bring it into effect,” Prashant Bhushan, a lawyer representing one of the petitioners, told reporters outside the court in New Delhi.