March 6: Despite the RBI’s concerns over governance issues, JM Financial has confidently stated that there are no material deficiencies in its loan sanctioning process and that it has not violated any regulations. The company emphasized its commitment to conducting business in a bona fide manner and reassured that it will continue to service its existing customers as per RBI’s advice.
In a recent development, JM Financial Products has come under the scrutiny of the Reserve Bank of India (RBI) for alleged regulatory violations in its loan sanctioning process. The RBI has imposed a ban on the company, preventing it from sanctioning and disbursing loans against shares and debentures, particularly for initial public offerings (IPOs) and non-convertible debentures (NCDs).
RBI Ban: JM Financial Vows to Uphold Customer Trust
A spokesperson for JM Financial highlighted the company’s two-decade experience in IPO financing, describing the product as short-term and self-liquidating4. They also defended the use of Power of Attorney (POA) as a common and legal industry practice for risk containment in IPO funding.
JM Financial has expressed its willingness to fully cooperate with the RBI’s special audit initiative and clarify its position. The RBI’s action follows a limited review based on information from the Securities and Exchange Board of India (SEBI), which revealed that the company facilitated repeated bidding for various IPOs and NCD offerings using loaned funds, with inadequate credit underwriting and marginal financing.
The RBI’s restrictions will be reassessed following the completion of the special audit and the rectification of the identified deficiencies. The company remains resolute in its stance and is prepared to address the RBI’s concerns to ensure the interests of its customers and stakeholders are safeguarded.
