UPSC-Relevant News Items

1. ED Issues Notice to CM Pinarayi, Ex-Minister Over Alleged Diversion of Rs 466 Cr KIIFB Masala Bond Funds

Page: 3

Summary:

• • The Enforcement Directorate (ED) issued a show-cause notice to Kerala CM Pinarayi Vijayan and former Finance Minister T M Thomas Isaac over the alleged diversion of Rs 466 crore.
• • The funds originated from 'masala bonds' raised by the Kerala Infrastructure Investment Fund Board (KIIFB) in 2019 under the ECB framework.
• • The ED contends that KIIFB used the proceeds for land acquisition, violating RBI Master Directions which generally prohibit such use for real estate activities.

Additional Facts:

• • The Reserve Bank of India (RBI), under the Foreign Exchange Management Act (FEMA), regulates the External Commercial Borrowing (ECB) framework, issuing Master Directions detailing permissible end-uses for funds like Masala Bonds.
• • The Enforcement Directorate (ED) serves as the institutional mechanism mandated under FEMA to investigate violations related to foreign exchange and capital account transactions, enforcing adherence to governmental borrowing norms.

Linkage with UPSC course:

• • General

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