RBI asks payments firms to track high value, suspicious transactions during elections

Corporate bond yields moderated in tandem with softening G-sec yields

The Reserve Bank of India (RBI) has advised all non-bank Payment System Operators (PSOs) to report high value or suspicious transaction during the course of the Lok Sabha elections, which got underway on April 19.

“Various electronic modes of payments have the potential to be used for transfer of money to influence the voters or to fund the candidates participating in the elections (General elections to Lok Sabha and Legislative Assemblies of Andhra Pradesh, Arunachal Pradesh, Odissa and Sikkim, 2024),” the RBI said in an April 15 letter to non-bank PSOs.

“The ECI has raised concern in this regard and suggested that suitable action, as required, may be taken,” the letter, copy of which was reviewed by Moneycontrol, said, referring to the Election Commission of India.

The banking regulator advised fintechs to report such high value/suspicious transactions to the appropriate authority or agencies as per the poll panels guidelines.

PSOs are the intermediaries including payment gateways, aggregators, payment apps and card networks that facilitate, process and settle  payments between buyers and sellers in online transactions.

These includes card networks like Visa, Mastercard, Rupay; payment gateways such as Razorpay, Cashfree, Mswipe, Infibeam, PayU and payments apps like Paytm, BharatPe, MobiKwik, Google Pay and PhonePe.

This also involves firms associated with cross border money transfer, ATM networks, Prepaid Payment Instruments (PPIs), instant money transfer, and Trade Receivables Discounting System (TReDS), Bharat Bill Payment System (BBPD) and so on.

The ECI’s diktat to banks asking them to share daily reports on suspicious transactions through the entire election season.

On March 16, the Chief Election Commissioner (CEC) Rajiv Kumar had directed banks to share daily reports to the poll panel on suspicious transactions through the entire election season.

He said that banks will have to see if there is huge demand in the currency chests.

“NPCI will look at whether there are more demands for payments through wallets. We will be looking at all wallet transactions. Banks will be sending almost daily reports of suspicious transactions. This is part of the steps from the poll body to curb the impact of money power and ensure fair elections," he said.

Meanwhile, the Income Tax Department, Pune has setup a control room to monitor and curb the misuse of money power during the said elections while movement of cash in bank vehicles is restricted after sunset.

The 2024 Lok Sabha elections will be held over seven phases from April 19 to June 1 and counting of votes will take place on June 4.