Kerala Infrastructure Investment Fund Board (KIIFB)

The Kerala Infrastructure Investment Fund Board (KIIFB) is a statutory body formed in 1999, by the Government of Kerala, under the Kerala Infrastructure Investment Fund Act (KIIF Act), 1999. KIIFB is a body corporate formed in view of mobilising infrastructure development funds from sources other than the revenue of state. The board is under the control of Department of finance of the Government of Kerala.

Basic Information:

Organization type: Statutory Body/ Body Corporate

Headquarters: Thiruvananthapuram

Established: 11 November 1999

Service Sector(s): Finance

Industrial Sphere(s): Kerala State

Personage(s): Chief Minister of Kerala, Chairman; Finance Minister of Kerala, Vice Chairman; Dr. KM Abraham (CFA, IAS), CEO & members secretary; Vikramjit Singh IPS, Deputy Managing Director.

Formational & Functional objectives:

The formation of KIIFB, as a statutory body through law passed in state assembly, forms a mechanism to seek fund from sources other than the state revenue, bypassing the regulations by Government of India in the borrowing capacity of states which is limited according to the GDP of state and by implementation of the Fiscal Responsibility and Budget Management Act. By sourcing fund from different sources, KIIFB finance for projects in sectors like Irrigation, Health, Education, Transportation, roads, bridges, light metro rails, water ways, Power and energy, Water supply, Water sanitation, Inland navigation, Ports, Solid waste management and drainage, Social and commercial infrastructure, IT and Telecommunication.

Organisational Structure and Hierarchy of Governance:

Under the direct control of Department of finance of the Government of Kerala, KIIFB is governed by a perpetual succession of members, an executive committee formed from the members, and a fund trustee and advisory commission (FTAC).

KIIFB board:

As per the organisation, it is chaired by the Chief Minister of Kerala, with the Finance Minister of Kerala holding the office of vice chairman. Other members include the Chief Secretary to Government, Vice Chairman of state planning board, Secretary of Law, Secretary of Finance, Secretary of Finance (resources), and seven independent members as an expert committee, with experienced persons in finance, banking, and economics in institutions of national reputation. The CEO to KIIFB, will also be serving as the secretary of members.

Executive Committee:

The executive committee is chaired by the Minister for Finance, with its members as the Chief Secretary, Secretary for Law, Finance, and Finance Resources, three independent members of the board nominated by the Government, and the CEO, KIIFB.

FTAC:

Fund trustee and advisory commission (FTAC) of KIIFB consists of three to five members with a chairperson, with a two year term during which the members cannot be removed by the government or by the board. The FTAC is constituted under Section 6C of the KIIF act, which in short words function as the trustee of the fund (Kerala Infrastructure Investment Fund). The function is to oversee the flow of fund as per the act, without any diversion.

In-house Operations:

The core command being the chairman, advised and managed by the Executive committee and FTAC, the CEO with deputy managing director as the subordinate, manages the executing divisions and in-house inspection wings, reports the chair.

Fund Sourcing:

The main source of fund is from outside the state revenue, mainly from general obligation bonds against unconditional government guarantee and revenue bonds with structured payment mechanism, both to be issued by the Government of Kerala. Any debt made on fund rising to the board is being guaranteed to be repaid by the Government.

As per the KIFF Act, the board is availed with a regular cash flow, from a share of the motor vehicle cess (10% share in 2017-2018, to be raised up to 50% share by 2022), and a minimum of Rs. 1 per litre of petrol sold within Kerala. Another contribution to the fund is from the revenue generation from interest of the loan provided by KIIFB to different projects. It also seeks fund in the form of loan from banks within India.

Issue of Masala Bonds:

KIIFB is the first sub sovereign body in India to issue a masala bond worth Rs. 2,150 Crores, admitted to the ISM (International Securities Market) of the London Stock Exchange at an interest rate of 9.723% for five years.

Pravasi Chitty/ NRI Chitty by KIIFB:

Pravasi Chitty, initially introduced in UAE is another fund rising method of KIIFB, launched in 2018, for expats and NRIs to get enrolled in chit schemes, for which the entire procedures from enrolment to auction is digital. The aim is to mobilise fund from expats through KSFE (Kerala State Financial Enterprise), the non-banking finance company of state government. The enrollers are given a choice of KIIFB financed projects for which the fund can be spent. A portion from the total turnover of Pravasi Chitty will be invested in the bonds of KIIFB, in the name of KSFE, which can add the value of bonds issued. The enrollers are also given a life insurance cover from LIC (Life Insurance Corporation of India), during the chit tenure, for which the death of enroller without or after chit bidding, the corporation (LIC) will be liable to pay rest instalments. As a part of encouraging expats into the scheme, the board calls the investors/subscribers to be a part of state development without financial liability.

Funding Process:

With the announcement of a project to be implemented under funding from KIIFB, either in the budget speech or by the ministry and the administrative sanction from the concerned department, KIIFB arranges expert support for the administration and SPVs (Special Purpose Vehicles) formed under the departments, for standard documentation part of the project. The state administration and KIIFB operates in a mutually helpful system to minimise time wasted in the red tapes. Following this the fund will be approved.

Contact KIIFB:

Second Floor, Felicity Square,

Mahatma Gandhi (MG) Road,

Statue, Thiruvananthapuram- 695001,

Kerala, India.

Phone: +91 (0471) 2780900