ED initiates investigation into KIIFB masala bonds, writes to RBI seeking details of deal

The Enforcement Directorate (ED) has started an investigation in connection with the masala bonds of the Kerala Infrastructure Investment Fund Board (KIIFB). The Central Agency, which acts as the economic offences watchdog, forwarded a letter to the Reserve Bank of India (RBI) seeking details of the deal.

The ED took action on the basis of the report of the Comptroller and Auditor General of India (CAG) which stated that the KIIFB has caused a liability of Rs 3100 crore to the government.

Disagreeing with the CAG report, Kerala Finance Minister Thomas Isaac, on November 19, accused the central probe agencies of collectively trying to undermine the Kerala government. Calling the political move "shrewd", the finance minister said the state government will face all the probe agencies with regards to the CAG reports allegations.

Isaac on Tuesday claimed a political conspiracy had been hatched to choke Kerala's development projects, as the Congress and BJP demanded his resignation for violating norms by making public the contents before it was tabled in the assembly.

KIIFB is the primary agency of the state government for financing large and critical infrastructure projects in the state. According to reports, KIIFB is said to have availed large term loans from several banks through masala bond at high-interest rates with the state government being the guarantor of the loans while the company has deposited the funds in various financial institutions at lower interest rates due to which it is said to incur significant losses.

READ | Kerala's Thomas Isaac Accuses Central Probe Agencies Of Undermining Govt Amid CAG Row

READ | CAG Report On KIIFB: Thomas Isaac Alleges Conspiracy Against Kerala

Opposition slams state government

Meanwhile, Congress and BJP have demanded a resignation from Isaac alleging that he had 'violated' the constitution by disclosing the report on the Kerala Infrastructure Investment Fund Board (KIIFB) before the Assembly

"I have given a letter to the Kerala speaker demanding action against the violation by Finance Minister Thomas Isaac. We are demanding his immediate resignation. The final report of the CAG is sent to the finance secretary who in a sealed cover sends it to the governor. Once approved by the governor, the FM tables it in the Assembly. This is the process followed. But the Kerala FM has subverted all this and has leaked the CAG report by saying it's a draft. No Finance Minister in the country has done such a blatant violation," said Leader of Opposition Ramesh Chennithala. 

Furthermore, BJP state president K Surendran has also slammed Isaac for leaking the CAG audit report, alleging that he was trying to create a 'Centre-state divide'.

"We urge the chief minister to drop him from the Cabinet. He's trying to create a Centre-state divide. He has to explain why he misled the public?" asked Surendran.

(With inputs from ANI)

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