Key Points
Shares of JM Financial plunged 19% on Wednesday to the day's low of Rs 77.55 after the Reserve Bank of India (RBI) barred JM Financial Products from undertaking any form of business in shares and bonds funding due to regulatory violations and governance lapses, said a strongly-worded letter issued by the banking regulator on Tuesday...
The RBI statement directed JM Financial Products to cease and desist", with immediate effect, from doing any form of financing against shares and debentures, including sanction and disbursal of loans against Initial Public Offering (IPO) of shares as well as against subscription to debentures...
JM Financial Products is a systemically important non-banking finance company registered with RBI and 99.71% is owned by the stock exchange-listed JM Financial Ltd..
RBI said this action is necessitated due to certain serious deficiencies observed in loans sanctioned for IPO financing and as non-convertible debentures subscriptions...
The banking regulators order also noted that the application for subscription, the demat accounts and the bank accounts, all were operated by the company using a Power of Attorney (POA) and a Master Agreement obtained from these customers without their involvement, whatsoever, in the subsequent operations...
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