The Enforcement Directorate has issued a show-cause notice under FEMA to Kerala Chief Minister Pinarayi Vijayan, former Finance Minister T.M. Thomas Isaac, and KIIFB CEO K.M. Abraham, alleging violations in the 2019 masala bond issue. The notice demands an explanation for the use of bond proceeds in land acquisition, with a potential penalty of ₹466 crore. Political leaders from the ruling CPI(M) have dismissed the action as election-timed harassment.
In a development reported on December 1, 2025, the Enforcement Directorate (ED) served a show-cause notice to Kerala Chief Minister Pinarayi Vijayan related to the Kerala Infrastructure Investment Fund Board (KIIFB)'s masala bond issuance in 2019. The notice, issued under the Foreign Exchange Management Act (FEMA), also targets former Finance Minister T.M. Thomas Isaac and KIIFB Chief Executive Officer K.M. Abraham. It alleges violations in the utilization of funds raised through the bonds, specifically for land acquisition, with a proposed penalty of ₹466 crore.
KIIFB raised approximately ₹2,150 crore via the masala bond in March 2019, listing it on the International Securities Market of the London Stock Exchange on April 1, 2019. The ED's probe focuses on whether these funds were used in breach of FEMA norms, including for purchasing land. The notice was reportedly sent a few days prior to the public disclosure.
Responding to the development, Isaac described the notices as 'politically motivated and a smokescreen.' Speaking to reporters on December 1, he noted that the ED has repeatedly raised the masala bond issue ahead of Kerala elections, such as the 2020 local body polls, 2021 Assembly elections, and 2024 Lok Sabha elections. Isaac emphasized that the Reserve Bank of India (RBI) had approved all actions, including the bond issuance. He clarified that no land was purchased with the funds but acquired, and that RBI had subsequently removed any restrictive conditions on such acquisitions. The ED has filed its report with the Special Director (Adjudication) in New Delhi, requiring the recipients to respond before the adjudicator.
CPI(M) State Secretary M.V. Govindan echoed these sentiments, calling the notice a 'political game' timed with elections. He argued that it challenges not just the leaders but the people of Kerala, highlighting KIIFB's role in driving ₹1 lakh crore worth of development projects in the state.