ED Issues Rs 466-Crore FEMA Notice to Kerala CM Pinarayi Vijayan, Ex-Minister Thomas Isaac in KIIFB Masala Bond Probe

Delhi: The Enforcement Directorate (ED) has served a ₹466-crore show cause notice to Kerala Chief Minister Pinarayi Vijayan, former finance minister Thomas Isaac, and the CM’s chief principal secretary K M Abraham in connection with alleged violations linked to the KIIFB Masala Bond issuance, officials confirmed on Monday.

The notice—issued under the Foreign Exchange Management Act (FEMA)—was dispatched nearly two weeks ago and does not mandate personal appearance from the individuals named. According to officials, a FEMA show cause notice is issued after the completion of the investigation, with the quantified amount representing the financial penalty for the alleged contravention.

The ED’s probe centers on the end-use of ₹2,000 crore raised by the Kerala Infrastructure Investment Fund Board (KIIFB) through masala bonds floated on the London Stock Exchange. Investigators are examining whether the deployment of these funds adhered to FEMA compliance norms and whether required permissions and disclosures were properly followed.

KIIFB, the Kerala government’s flagship financial institution responsible for executing major infrastructure projects, made headlines in 2019 when it raised ₹2,150 crore in its debut masala bond issue. The bond sale was part of a larger strategy to mobilize ₹50,000 crore for critical development works across the state, including roads, bridges, educational infrastructure, and healthcare facilities.

Officials say the ED’s notice marks a critical stage in the investigation, as the state government has consistently maintained that KIIFB’s bond issuance followed all legal and regulatory procedures. With the probe now entering the penalty phase, political tensions in Kerala are expected to intensify, especially with the ruling LDF accusing central agencies of targeting state-led development initiatives.