Kerala CM Vijayan dismisses ED notice in KIIFB case as political move ahead of elections

Kerala Chief Minister Pinarayi Vijayan on Friday strongly criticised the Enforcement Directorate’s (ED) show-cause notice issued to him and senior officials of the Kerala Infrastructure Investment Fund Board (KIIFB), calling it “utterly ridiculous” and politically timed. The notice pertains to alleged violations under the Foreign Exchange Management Act (FEMA) linked to KIIFB’s foreign borrowings through Overseas Rupee-Denominated Bonds (RDBs).

The ED issued the notices on November 12 to the Chief Minister (as KIIFB Chairman), Vice Chairman T M Thomas Isaac, CEO KM Abraham, and KIIFB itself, clarifying that personal appearance is not required. The action relates to KIIFB raising funds abroad through RDBs, bonds sold to foreign investors in Indian rupees, meaning Kerala borrowed money from overseas in its own currency. The ED alleges that part of this borrowed money was later used to buy land, which RBI rules reportedly prohibit, prompting the notice.

Reacting sharply, Vijayan said such actions are expected when elections draw near and rejected any suggestion of wrongdoing. He emphasised that KIIFB’s projects had been carried out in strict compliance with the Reserve Bank of India’s guidelines. “Calling it a notice against KIIFB is completely laughable. KIIFB was formed in 2016 to build ₹50,000 crore worth of infrastructure. Every single project followed RBI norms without deviation,” he said.

KIIFB, established by the Kerala government to accelerate infrastructure development, had raised funds through RDBs listed on the London and Singapore Stock Exchanges, a move that made Kerala the first Indian state to access international bond markets in this manner. The agency raised ₹2,672.80 crore for infrastructure works, but ED now alleges that ₹466.91 crore of this amount was used to purchase land, something RBI’s 2015 Master Direction prohibits under External Commercial Borrowings.

The BJP seized on the development, with Kerala unit chief Rajeev Chandrasekhar accusing the government of misusing public money and raising costly loans abroad despite cheaper domestic options. He questioned why KIIFB opted for a 9.5% interest foreign borrowing, who received an alleged ₹21 crore commission and whether mandatory FEMA approvals were sought. “These are Malayalees’ hard-earned taxes, not CPM’s party fund,” he said.

Vijayan dismissed these allegations as part of a political campaign and maintained that KIIFB’s operations were transparent, lawful, and focused solely on public infrastructure. The dispute adds another layer of confrontation between the state government and central agencies, with both sides standing firm as the investigation continues.