RBI Directs Payment Companies to Monitor High-Value Transactions During Elections

The Reserve Bank of India (RBI) has instructed all regulated payment companies to closely monitor high-value or suspicious transactions during the upcoming general elections, according to senior executives familiar with the matter.

In a letter dated April 15, the RBI directed payment system operators (PSOs) to take measures to prevent potential misuse of electronic fund transfers for influencing voters or indirectly funding election candidates. The Economic Times (ET) has obtained a copy of the letter.

One executive revealed, “The regulator wants payment companies to specifically track high-value merchant payments and scrutinize recurring person-to-person payments.”

Regulated payment aggregators such as Razorpay, Cashfree, CCAvenue, and Mswipe, along with mobile wallet license holders like PhonePe and MobiKwik, fall under the purview of these directives.

The RBI’s directive comes in response to concerns raised by the Election Commission of India regarding potential misuse of digital payment mechanisms during elections. Payment companies are expected to identify and report any dubious transactions to relevant authorities.

Traditionally, cash circulation tends to increase during elections, prompting the RBI to instruct banks to monitor cash movement. However, this marks one of the first instances where the RBI has specifically directed payment companies to monitor digital payment activities during elections.

This move underscores the growing importance of monitoring digital transactions to ensure transparency and prevent illicit activities during critical events like elections. Industry insiders view this directive as a proactive step by the regulator to maintain the integrity of the electoral process amidst the increasing adoption of digital payment technologies.