'RBI never raised any concerns over masala bonds': MV Govindan on ED notice

A day after the Enforcement Directorate (ED) issued show-cause notices in connection with alleged money laundering and FEMA violations related to the KIIFB masala bond issue, CPM state secretary M V Govindan strongly defended the transaction, asserting that the funds were received with RBI approval.

Govindan, in an article published in the CPM mouthpiece Deshabhimani on Tuesday, said the masala bonds were received in 2019 with the Reserve Bank of India’s permission and that all financial details were duly communicated to the bank. “The RBI has not raised any concern regarding legal or procedural lapses. Despite this, the ED—functioning like an RSS-affiliated outfit—has yet again targeted the LDF government ahead of elections,” he stated.

The show-cause notices, issued on November 12 but received by the recipients only three days ago, do not require personal appearance. They were served to KIIFB, its CEO K M Abraham, former Finance Minister T M Thomas Isaac, and Chief Minister Pinarayi Vijayan in his capacity as chairman of the board.

According to the ED, KIIFB raised ₹2,672.80 crore through rupee-denominated masala bonds listed on the London and Singapore stock exchanges under the External Commercial Borrowing (ECB) route. The agency alleges that ₹466.91 crore was used for land acquisition—an expenditure it claims violates RBI rules and FEMA guidelines. A complaint under FEMA was filed on June 27, 2025, and the adjudicating authority issued the notices after taking cognisance.

Govindan said the timing of the action—just a week before Kerala’s local body elections—reveals a political motive. “During previous elections, the ED tried unsuccessfully to frame Thomas Isaac. Now they are trying to relight the same firework, hoping it will explode this time,” he claimed.

He emphasised that the LDF’s local poll campaign is centred on development and welfare, with KIIFB playing a crucial role in enabling major infrastructure projects. “Despite the Modi government blocking Kerala’s legitimate share of ₹1.70 lakh crore, development has not stopped. KIIFB funding has enabled progress in public works, education, water supply, sports, tourism, transport, agriculture and industry,” he said.

Govindan accused the ED of acting out of political vendetta, citing previous investigations such as the Karuvannur cooperative bank case and the gold smuggling case, where he said the agency could not proceed due to a lack of evidence.

Quoting figures presented in Parliament by Minister of State for Finance Pankaj Chaudhary, he said that since 2014, the ED registered 1,930 cases, but secured convictions in only two. “Over 95 per cent of these cases are against opposition leaders. Two sitting Chief Ministers—Hemant Soren and Arvind Kejriwal—were jailed as part of this politically motivated assault. Cases are underway against Sonia Gandhi and Rahul Gandhi as well,” he said.

He also criticised the Congress leadership in Kerala for allegedly supporting the ED’s actions locally, while the national leadership denounces the agency. “Congress in Kerala are welcoming ED investigations with open arms. Their proximity to the BJP is becoming increasingly evident,” Govindan said.