Private lenders not under EC scanner for illegal cash

Recently, Reserve Bank of India governor Raghuram Rajan said that during elections, more cash flows among the public. “You can guess as to reasons why, we can also guess,” he quipped, apparently referring to unethical spending by political parties including bribing of voters. In response, Chief Election Commissioner Nasim Zaidi said the EC will follow up with the RBI and take action based on the information the RBI provides.

The exchange came at a time when concerns were being voiced about money flow that has become a feature of TN elections, and over whether 2016 will be any different. State election officials have said that directives have been issued to banks operating in the state to report to the commission any suspicious transactions.

But RBI officials say that TN election officials have not made any request or official communication in this regard. “This is like searching for a needle in a haystack. They’ve met only six or seven PSU banks - how will it help, given the number of private lenders operating in TN? Besides, their logic is that they met the public sector banks, because all government accounts are handled by PSUs. Any politician or front will have at least 12-14 bank accounts, including with private lenders,” says a senior RBI official. Many private lenders say they are unaware of any directive from the election commission.

RBI officials and private bankers said that election officials should meet heads of all banks operating in the state if they were serious about fighting graft and bribing of voters. “And it will be easier for the EC to get this information if they approach the apex bank. We are constantly compiling transaction data on a weekly and monthly basis. And most of this information is available to the general public periodically,” said the RBI official.

The Tamil Nadu election commission has said that they have software to analyse suspicious transaction details.

“Every now and again, we have scandals like the Panama paper or money in Swiss bank accounts. Are these overseas transactions all being made by the handful of PSUs that have apparently been approached? So if a politician in TN wanted to send money to multiple accounts, wouldn’t the odds of him selecting a PSU be one in 10? They could use any of the private lenders,” says a top executive at a private lender.