Election Commission orders watch on suspicious payments from digital wallets

Acting on a EC letter, the Department of Financial Services had written to the State Level Bankers’ Committee (SLBC) of Karnataka on April 13, 2023, saying: “With the advancement of electronic modes of payments, the same may be used for transfer of money to influence the  voters or to fund the candidates participating in the election. The Election Commission of India has raised concern on this and  suggested this department to take suitable action as required.”

It asked the SLBC to sensitise its member banks to report high value and suspicious transactions to the authorities.

According to a source in the EC, apart from the Karnataka elections, the same suspicious transactions were seen during a recent bye-election as well. In the run-up to the Lok Sabha elections, similar instructions have been issued to banks in other states, the source said.

Among the transactions that raised eyebrows were those of around Rs 1,000-Rs 2,000 each from a single payment wallet to multiple recipients in a short duration.

Asked how the EC would counter the use of digital wallets for distribution of money during the Lok Sabha elections, Chief Election Commissioner Rajiv Kumar said at a press conference in Chennai last week that he cannot reveal how it would be tackled, but added that the EC would keep a strict vigil.

“The banks will be keeping a watch on the accounts from where the money is going to multiple accounts, that is the wallets they are using. The organisation called the National Payments Corporations of India Ltd, will also be roped into to keep a watch on the transactions through wallet. If people try new ways of transferring money, we’ll also not be very far behind to catch them because the systems have all been put in place,” Kumar had said on February 24.

With UPI transactions gaining popularity over the past few years, the use of digital wallets as a way to influence voters has become a cause of worry. Over the past five years, UPI transactions have increased from Rs 21.31 lakh crore in 2019-2020 to over Rs 143 lakh crore in 2023-2024 (as of December 31, 2023), according to a Finance Ministry reply to Parliament on February 5.