RBI asks payment system operators to report high value, suspicious transactions during elections

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Reserve Bank of India has asked all authorised non-bank Payment System Operators (PSOs) to report high value and suspicious transactions undertaken on their platforms during the election period.

“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. The ECI (Election Commission of India) has raised concern in this regard and suggested that suitable action, as required, may be taken,” the regulator said in a letter dated April 15.

“You are, accordingly, advised to do the needful and report high value/ suspicious transactions to the appropriate authority/ agencies as per the guidelines issued by ECI from time to time,” said the letter accessed by businessline.

The Election Commission has so far announced the schedule for holding General Elections to Lok Sabha and Legislative Assemblies of Andhra Pradesh, Arunachal Pradesh, Odisha and Sikkim.

PSOs are entities that facilitate electronic payments by providing the necessary infrastructure and technology such as online payments, card payments, mobile payments and electronic fund transfers. These include Clearing Corporation of India, National Payments Corporation of India (NPCI), Cards Payment Networks, Cross border Money Transfer, ATM networks, Prepaid Payment Instruments, White Label ATM Operators, Instant Money Transfer, Trade Receivables Discounting System and Bharat Bill Payment System.

RBI reportedly wants these payments ecosystem players to track any out-of-the-ordinary transactions, recurring transactions or increase in certain type of transactions, including through Prepaid Payment Instrument (PPI) wallets, in order to avoid misuse of funds. This is in-line with the central bank’s increased focus on monitoring of end use of funds, especially following the breach of certain money laundering violations by Paytm and lapses in KYC compliance by several banks and NBFCs in recent months.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience. Educator and Digital Creator

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