THIRUVANANTHAPURAM: Former Finance Minister K M Mani said the Kerala State Financial Enterprises (KSFE) did not have permission to run the much-hyped Pravasi Chitty, devised to mobilise funds for Kerala Infrastructure Investment Fund Board (KIIFB).
“KSFE does not have the permission under the fourth section of the Chitty Act to conduct Pravasi Chitty. KSFE’s notice on the prior registration for Pravasi Chitty does not have details on whether any prior sanction was given for it. This is a punishable offence,” Mani said in a statement. As per the Chitty law, KSFE cannot transfer its chitty funds to another agency.
RBI sanction or amendment in the Chitty Act is necessary for such a fund transfer. Chitty instalments or security amount cannot be parked in KIIFB under the FEMA.
The agreement drafted for the Pravasi Chitty does not mention the government’s promise of an insurance cover for chitty subscribers. Also, it does not state that the Chitty funds will be vested with the KIIFB. Mani flayed the government decision to invest the Pravasi Chitty fund for non-profit works like coastal and hill highways. He feared there would be a delay in the payment of the matured amount to investors.
Mani also questioned Isaac’s recent statement in Malappuram `10,000 crore will be collected through the Pravasi Chitty.
As per the chitty rule, the organiser should deposit an equal amount of the sala (total denomination of the chitty) in a recognised bank and obtain a guarantee, or, transfer a government security which is 1.5 fold of the chitty amount in the name of the assistant registrar who sanctions the chitty.
Isaac said the chitty could be registered only after depositing the security amount. According to him, KSFE will deposit the amount in KIIFB. But neither the Chitty rules nor the RBI exemption order for Pravasi Chitty allows collection of security amount from NRKs or deposit the same in KIIFB.