RBI increases payments surveillance during elections

The Reserve Bank of India (RBI) has instructed payment system operators to track potentially suspicious transactions amid ongoing elections, a business newspaper has reported.

“In a letter dated April 15, the RBI asked payment system operators to prevent any potential misuse of electronic fund transfer mechanisms to influence voters or indirectly fund poll candidates,”  the Economic Times reported today (April 22). The newspaper said it had seen a copy of the letter. Central Banking has approached the RBI for comment.

General elections began on April 19 and will take place in seven phases, concluding on June 1. Indian elections are highly expensive with parties spending heavily on campaigning, advertising and even bribing voters, observers say.

The Election Commission of India said on April 15 that it seized assets, including cash, worth 46.5 billion rupees ($557.7 million) of “inducements” between March 1 and April 13. It said this was a significant increase on the amount it seized in the previous general election year of 2019. The share of cash among the seized assets was $47 million, compared with $247 million in drugs, the highest share.

Consumers are increasingly making digital payments through the Unified Payments Interface system.

“Historically, cash in circulation has gone up during elections,” the Economic Times said. “And the RBI has typically instructed banks to monitor movement of cash.”

On February 15, the Supreme Court ordered an end to an electoral bond scheme, through which companies and individuals donated to political parties anonymously. Details made public after the verdict revealed that the ruling Bharatiya Janata party received nearly half of all contributions to the tune of $726 million.

The RBI had expressed reservations when the government proposed the electoral bond scheme in 2017, saying it could be misused by shell companies, media reported.