ED Issues Show Cause Notice to Kerala CM in Masala Bond Case
A show cause notice is issued after the end of the investigation in a FEMA investigation, and the contravention quantified in it is akin to a penalty
By : Deccan Chronicle
Update: 2025-12-01 04:12 GMT
Thiruvananthapuram: The Enforcement Directorate (ED) has issued a show-cause notice to Chief Minister Pinarayi Vijayan over alleged violations of the Foreign Exchange Management Act (FEMA) linked to the masala bond issued by the Kerala Infrastructure Investment Fund Board (KIIFB).
Similar notices have also been sent to former Finance Minister Dr. T. M. Thomas Isaac and KIIFB CEO K. M. Abraham.
According to the ED, these notices, sent on November 12, pertain to contraventions of FEMA provisions and RBI's master directions by KIIFB and its officials, involving an amount of Rs 466.91 crore.
The ED notices, however, do not require the Chief Minister, Isaac or Abraham to appear in person.
Notices issued by Rajnish Dev Burman, Adjudicating Authority and Special Director of the ED, relate to adjudication proceedings under FEMA. They allege that Rs 466.91 crore from funds raised through rupee-denominated bonds, or masala bonds, was used to buy land, an act the ED says was "specifically prohibited" and violated RBI's master direction issued on June 1, 2018. KIIFB, which is the state's major agency for implementing large infrastructure projects, had floated masala bonds on the London and Singapore stock exchanges, securing Rs 2672.8 crore under external commercial borrowing. It is part of a plan to mobilise a whopping Rs 50,000 crore.
CPM accuses BJP of creating a smokescreen
The CPM has accused the BJP of using ED notices to stir confusion during the election season in Kerala, calling them a political ploy. The notices, sent just days before key local body polls, drew criticism from former Finance Minister Thomas Isaac, who oversaw the lunch of the masala bond during his tenure and called the move "politically motivated."
Isaac pointed out that similar notices had been issued before the 2020 local body polls, the 2021 assembly polls, and the 2024 Lok Sabha polls. He stressed that all actions related to the masala bond had RBI approval, which also removed restrictions on purchasing land.
Isaac clarified that no funds were used to purchase land, only to acquire it, and said legal advice would be sought before responding to the ED notice.
Opposition Leader V D Satheeshan claimed the ED notices were just a ploy by the Centre to intimidate the CPM, pointing out that previous probes linked to the LDF government, including the Karuvannur Cooperative, had gone nowhere. He added that the BJP and CPM would likely settle the masala bond case as well, recalling that the ED had issued notices to Isaac during the LOk Sabha polls, which he viewed as another tactic to threaten the Chief Minister.
CPM state secretary M V Govindan accused the BJP of playing political games ahead of the local body polls, noting that similar notices had been issued during the last three elections and calling it a mere gimmick. He said the ED's move was a challenge to the people of Kerala, given KIIFB's role in driving development projects worth Rs 1 lakh crore.
According to the ED, these notices, sent on November 12, pertain to contraventions of FEMA provisions and RBI's master directions by KIIFB and its officials, involving an amount of Rs 466.91 crore.
The ED notices, however, do not require the Chief Minister, Isaac or Abraham to appear in person.
Notices issued by Rajnish Dev Burman, Adjudicating Authority and Special Director of the ED, relate to adjudication proceedings under FEMA. They allege that Rs 466.91 crore from funds raised through rupee-denominated bonds, or masala bonds, was used to buy land, an act the ED says was "specifically prohibited" and violated RBI's master direction issued on June 1, 2018. KIIFB, which is the state's major agency for implementing large infrastructure projects, had floated masala bonds on the London and Singapore stock exchanges, securing Rs 2672.8 crore under external commercial borrowing. It is part of a plan to mobilise a whopping Rs 50,000 crore.
CPM accuses BJP of creating a smokescreen
The CPM has accused the BJP of using ED notices to stir confusion during the election season in Kerala, calling them a political ploy. The notices, sent just days before key local body polls, drew criticism from former Finance Minister Thomas Isaac, who oversaw the lunch of the masala bond during his tenure and called the move "politically motivated."
Isaac pointed out that similar notices had been issued before the 2020 local body polls, the 2021 assembly polls, and the 2024 Lok Sabha polls. He stressed that all actions related to the masala bond had RBI approval, which also removed restrictions on purchasing land.
Isaac clarified that no funds were used to purchase land, only to acquire it, and said legal advice would be sought before responding to the ED notice.
Opposition Leader V D Satheeshan claimed the ED notices were just a ploy by the Centre to intimidate the CPM, pointing out that previous probes linked to the LDF government, including the Karuvannur Cooperative, had gone nowhere. He added that the BJP and CPM would likely settle the masala bond case as well, recalling that the ED had issued notices to Isaac during the LOk Sabha polls, which he viewed as another tactic to threaten the Chief Minister.
CPM state secretary M V Govindan accused the BJP of playing political games ahead of the local body polls, noting that similar notices had been issued during the last three elections and calling it a mere gimmick. He said the ED's move was a challenge to the people of Kerala, given KIIFB's role in driving development projects worth Rs 1 lakh crore.