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

The system, called ‘Electoral Bonds’, 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 and donate them to a political party of their choice.

A five-judge bench headed by Chief Justice DY Chandrachud said that the system is “unconstitutional”.

The court directed SBI to not issue any more of these bonds.