Increased vigilance regarding irregularities in financial transactions during election season, RBI gave instructions to Fintech

During the election season, while government agencies are busy ensuring a proper conclusion of the biggest festival of democracy, financial transactions are also being monitored strictly. At the level of government or private sector banks, the work of collecting information about suspicious financial transactions and reporting them to the concerned agencies is going on with more promptness than before. Besides, on the instructions of RBI, all kinds of information are also being collected from technology platforms that play the role of intermediaries in financial transactions.

After the RBI's most recent directives, data is being gathered from payment apps like Paytm, MobiKwik, GooglePay, and PhonePe, payment gateway companies like Razorpay, Cashfree, and Infibeam, and card network providers like Visa, MasterCard, and Rupay.

The RBI recently sent a letter to all of the nation's Payment System Operators (PSOs) requesting that they keep an eye out for any suspicious transactions during election season and exercise caution when processing large-scale transactions. By the RBI's predetermined guidelines, these private sector organisations have also been asked to continue exchanging information at the central level.

In fact, according to the current rules of RBI, every bank branch has to share information about suspicious financial transactions at the top level at fixed intervals. Regarding the letter written by RBI, sources in the banking sector say that this is the first general election in India after the fintech revolution has reached its peak. Even in the year 2019, the fintech revolution was not so extreme and dozens of companies providing payment gateway facilities were not there then or their expansion was quite limited. In such a situation, this concern of RBI is justified because earlier financial transactions were done only through banking channels and the work of monitoring any kind of financial irregularities could be done at the level of bank branches. There are many options now. Therefore more vigilance is necessary.

Election Commission data says that between March 01 and April 13, 2024, cash, gifts, drugs or other illegal items worth a total of Rs 4650 crore have been seized. This includes Rs 395 crore in cash which has been seized by the investigating agencies on information from various financial agencies. In fact, the said letter has been written at the RBI level only at the behest of the Election Commission. The Election Commission has sought the cooperation of RBI to make the election process transparent and to prevent the use of black money in elections. It may be noted that only last month, the Election Commission had asked all the banks to report to it daily about suspicious financial transactions.