Thomas Issac.. Image Source: IANS

March 03 : Thiruvananthapuram: Finance minister Thomas Isaac on Wednesday came down on the enforcement directorate’s decision to issue notices to KIIFB CEO K M Abraham and axis bank officials to appear for questioning.

 

Speaking at a meet the press event, Isaac said that the ED’s plans to undermine KIIFB would come a cropper. The government would not be cowed down by the central agency, he said. The ED had registered a case against KIIFB over alleged violation of the provisions of FEMA (foreign exchange management act), citing the CAG’s finding that KIIFB had borrowed funds from abroad without the central government’s permission in violation of the provisions of the act.

 

Coming down on the BJP-led central government, Isaac alleged that the centre was trying to “choke KIIFB to death”. The centre’s efforts to destroy KIIFB would not come to fruition, he added.

 

The ED’s notice to KIIFB officials was part of the centre’s efforts to undermine development initiatives in Kerala. The LDF government’s initiatives had the backing of the people of Kerala. The state government would not bow down before the centre’s attempts to intimidate and deflate the morale of officials, Isaac asserted. Refuting the ED’s charge that KIIFB violated the provisions of the FEMA, the Kerala finance minister said that KIIFB complied with the provisions of the act while floating masala bonds.

 

The reserve bank was the implementing agency of the FEMA. KIIFB had obtained the central bank’s permission to float masala bonds, he said. Describing KIIFB as a body corporate, Isaac said that a body corporate could issue masala bonds to borrow money with the permission of the reserve bank. It was not the state government but KIIFB, a body corporate, which was borrowing funds from abroad, he clarified.

 

However, the CAG in its report had flagged violation of the provisions of FEMA in KIIFB’s external borrowings by pointing out that the interest for the funds KIIFB borrowed from abroad were being paid back from the state government’s revenue.

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