ED issues show-cause notice to Kerala CM Pinarayi Vijayan over KIIFB masala bond deal

Thiruvananthapuram: The Enforcement Directorate (ED) has sent a a Rs 466-crore FEMA show-cause notice to Kerala Chief Minister Pinarayi Vijayan and others in connection with the KIIFB masala bond transaction. The notice follows the discovery of violations under FEMA (Foreign Exchange Management Act) during the investigation.

The Chief Minister, along with former Finance Minister Thomas Isaac and KIIFB CEO K M Abraham, has received notices.

The notice, which does not require the recipients to appear in person, was reportedly issued by the federal probe agency about 10–12 days ago under the provisions of the Foreign Exchange Management Act (FEMA).

After a prolonged investigation for over three years, the ED filed a complaint before the adjudicating authority. The ED’s findings state that the funds raised through the masala bond were used for infrastructure development projects, which constitutes a violation of FEMA regulations.

The probe focused on the end-use of Rs 2,000 crore raised by KIIFB through masala bonds and whether the transactions complied with FEMA regulations.

The Kerala Infrastructure Investment Fund Board (KIIFB), the state government’s main agency for financing major infrastructure projects, had raised Rs 2,150 crore in 2019 via its first masala bond issue. This was part of its broader plan to mobilise Rs 50,000 crore to fund large and critical infrastructure projects across Kerala.

(With PTI inputs)