Masala Bond: KIIFB did not violate any laws or regulations, says government

THIRUVANANTHAPURAM: The Kerala government has rejected the Enforcement Directorate’s allegation that land worth Rs 466 crore was purchased in violation of rules using funds raised through the Masala Bond. The government said the claim is factually incorrect and that it will clarify the matter to the concerned authorities.

According to the state government, KIIFB raised funds abroad through the Masala Bond strictly in accordance with guidelines issued by the Ministry of External Affairs and the Reserve Bank of India. The money from the Masala Bond was not used to buy land, but to acquire land for various development projects. A total of Rs 2,150 crore raised through the Masala Bond was spent on 339 projects. The funds were raised in 2019 with a tenure of five years. KIIFB has already repaid Rs 3,195 crore, including principal and interest.

The government also rejected the opposition’s criticism that raising funds at an interest rate of 9.72% caused a financial loss to the state and that cheaper borrowing options were available within India. When the tender was floated, the rate offered was 10.15%. The Andhra Pradesh Capital Region had raised funds at 10.72%. In comparison, the Masala Bond rate of 9.72% was lower. The government further stated that raising funds in Indian Rupees helped avoid losses from exchange rate fluctuations of the US dollar, and therefore, the state did not incur any loss.

Nothing to hide, says KIIFB CEO
KIIFB CEO Dr K.M. Abraham said there is nothing to hide regarding the Masala Bond and that KIIFB is ready to face any form of legal scrutiny. He added that no law, including FEMA, was violated. Refuting the allegation that Rs 466 crore was used for land purchase, he clarified that only Rs 66 crore was actually used.