The VACB's first unit here launched the probe based on a complaint in this regard by BJP state general secretary K Surendran alleging that the minister's action had caused loss to the state exchequer.
"We have started the probe into the allegations," a senior VACB officer said.
Reacting to the the Bureau's action, the minister told reporters: "Let the inquiry proceed..let the truth come out."
Shylaja rejected the charges as "baseless" when the allegations cropped up last month.
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The minister's office has clarified that she had done nothing illegal for getting the reimbursement for her husband's treatment at a private hospital in 2016.
The ministers can claim the medical reimbursement of family members, it said.
The state BJP has sought her resignation alleging that Shylaja had not only violated the oath of office but also indulged in criminal offence.
The party alleged that Shylaja could not claim the medical reimbursement as the minister's husband K Bhaskaran is a government pensioner and also the chairman of the Mattannur municipality.