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ED notices to Kerala CM Pinarayi Vijayan, former minister Thomas Isaac over masala bond probe

Former IAS officer has also been issued notice in connection with alleged FEMA violations.

2 min readUpdated: Dec 1, 2025 10:09 PM IST

CPI(M) leaders deny wrongdoing, saying KIIFB followed all norms and regularly reported to the RBI.

The ED has issued FEMA show-cause notices to Kerala CM Pinarayi Vijayan, ex-minister Thomas Isaac and KIIFB CEO over alleged violations tied to the masala bond fund usage. (File photo)

The adjudicating authority of the Enforcement Directorate has served show-cause notices to Kerala Chief Minister Pinarayi Vijayan, former finance minister Thomas Isaac and former IAS officer Dr K M Abraham in connection with alleged Foreign Exchange Management Act (FEMA) violations pertaining to the masala bond issued by the Kerala Infrastructure Investment Fund Board (KIIFB).

Vijayan is the chairperson of KIIFB and Isaac was its vice-chairperson in 2019, when the CPI(M) government issued a masala bond to raise funds for infrastructure development. Abraham is the chief executive officer of KIIFB, the state agency that mobilises funds for infrastructure projects beyond what is earmarked in the budgets.

In 2022, the ED registered a case related to Foreign Exchange Management Act (FEMA) violations in connection with KIIFB raising Rs 2,150 crore through masala bonds listed on the London Stock Exchange. The notices are a sequel to that probe.

The notices issued by adjudicating authority special director Rajnish Dev Burman on November 12 said the case pertained to contraventions of FEMA provisions by KIIFB. They were told to file a reply within 30 days through their counsels. The notices were served after finding that Rs 466 crore mobilised through the masala bond had been deployed for purchasing land, which was deemed a FEMA violation.

Isaac said the masala bond funds were utilised for 339 projects in eight areas. Of this, Rs 466 crore was spent on the land acquisition component of various projects.

The ED has interpreted this as land purchase. FEMA restrains the use of foreign currency for land acquisition to prevent speculation. Now the ED argues that land acquisition for development projects was speculative in nature, he said.

The CPI(M) leader said KIIFB had used masala bond funds as per norms and details had been submitted to the RBI every month. The RBI had not flagged any issues so far, he said, adding that the next course of action will be decided after consulting the chief minister.

Shaju Philip

Shaju Philip is a Senior Assistant Editor at The Indian Express, where he leads the publication's coverage from Kerala. With over 25 years of experience in mainstream journalism, he is one of the most authoritative voices on the socio-political, religious, and developmental landscape of South India. Expertise, Experience, and Authority Decades of Regional Specialization: Shaju has spent more than two decades documenting the "Kerala Model" of development, its complex communal dynamics, and its high-stakes political environment. Key Coverage Beats: His extensive reporting portfolio includes: Political & Governance Analysis: In-depth tracking of the LDF and UDF coalitions, the growth of the BJP in the state, and the intricate workings of the Kerala administration. Crime & Investigative Journalism: Noted for his coverage of high-profile cases such as the gold smuggling probe, political killings, and the state’s counter-terrorism efforts regarding radicalization modules. Crisis Management: He has led ground-level reporting during major regional crises, including the devastating 2018 floods, the Nipah virus outbreaks, and the Covid-19 pandemic response. ... Read More

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