Irregularities in KIIFB Masala Bond: EC registers case, summons officials to Kochi office
Kochi: The Enforcement Directorate has registered a case over the KIIFB masala bond observing irregularities in the primary investigation. KIIFB CEO KM Abraham, deputy managing director Vikramjith Singh and Axis bank Mumbai head have been summoned for interrogation at ED office in Kochi next week.
KIIFB has violated the Foreign Exchange Management Act (FEMA) by receiving financial aid from abroad through Masala bond without taking the centre’s permission, said ED.
It is learned that ED registered the case on the remarks of the CAG report. The preliminary investigation has revealed that operations of the Kerala Infrastructure Investment Fund Board (KIIFB) were illegal and serious irregularities had taken place.
Usually, KIIFB borrows loan by issuing Masala Bonds. Permission from the central government is mandatory for taking a loan in Indian Money through Masala Bond. The central government holds the right to borrow loan from foreign countries, pointed out the CAG report.
At the same time, the state finance department claimed that KIIFB issued the Masala Bonds with the permission of the Reserve Bank of India. But CAG has found that KIIFB did not hold any power for making such a move.
Preliminary investigation report of ED also confirmed this fact.
As per the RBI rule, an application should be submitted through an approved bank for receiving the Masala Bond. For this purpose, KIIFB selected Axis Bank. The finance department claimed that an application to issue Masala Bonds was submitted through this bank.
Meanwhile, ED has observed interventions of Axis bank as suspicious. Hence, officials of the banks are also summoned for interrogation.
Following the CAG report, ED has initiated a probe into the Masala Bonds and KIIFB transactions. Doubts regarding the rules were cleared with the RBI. After these procedures, the ED registered a case against KIIFB.