Election Commission officials in India have begun legal proceedings against Railways Minister Laloo Prasad Yadav, who is suspected of bribery.
Laloo Prasad Yadav - his wife is now Bihar's chief minister
Opposition parties have complained about television pictures that show him handing out money to supporters during a rally in his home state of Bihar.
The commission says that Mr Yadav's Rashtriya Janata Dal party may now be "derecognised".
Mr Prasad denies paying bribes, saying the money was for the poor.
Giving cash away
The pictures show Mr Yadav doling out 100 rupee ($2.28) notes during a rally in Bihar where state elections are due in February.
Indian newspapers reported him as saying that he often gave cash away - not just during election time - to receive blessings from low caste (Dalit) women.
The minister - a senior member of the Indian cabinet - said he was thankful that he was filmed handing out rather than receiving money from the masses during an election rally.
"I know what can land me in trouble," said Mr Yadav, who has faced corruption charges before.
He insists he distributed the money to enable poor people to buy sweets, and that it was not an enticement for them to vote for his party.
But opposition politicians say that under Indian law it is illegal to give and receive bribes. They have called for the incident to be examined by a parliamentary ethics committee.
On Monday opposition MPs walked out of the Indian parliament in protest over the issue.
"On the Election Commission's directive, Bihar's chief electoral officer has filed a First Information Report against Mr Yadav over allegations he violated the electoral conduct code," panel spokesman AN Jha said.
Mr Yadav is one of the most popular politicians in Bihar - one of India's most lawless states.
His wife, Rabri Devi, was installed as chief minister after he stepped down following corruption allegations in 1996.