JM Financial Clocks 19 Per Cent Fall In Shares After RBI Imposes Restriction On Group Firm

RBI levied restrictions on JM Financial Products Ltd after it found that it was involved in several manipulations, such as helping some of its customers place bids for IPOs by using loaned funds

JM Financial clocked a 19 per cent fall in its shares after the Reserve Bank of India placed restrictions on the fintech firm. The banking regulator imposed curbs on group entire JM Financial Products Ltd stating that it found the company guilty of several manipulations.

The company’s stock declined more than 19 per cent to touch Rs 77.10 per share on the BSE, while it plunged 18.75 per cent to reach Rs 77.55 apiece on the NSE, reported PTI. The firm’s market capitalisation (mcap) decreased by Rs 1,484.53 crore to hit Rs 7,643.63 crore. 

The central bank levied restrictions on JM Financial Products Ltd after it found that the firm was involved in several manipulations, such as consistently helping some of its customers in bidding for several IPOs by using loaned funds. 

As part of disciplinary action, the regulator has banned the non-deposit-taking NBFC from catering any sort of financing against shares and debentures, inclusive of sanction and distribution of loans against IPOs of shares and against subscription to debentures. These restrictions are applicable immediately. 

In addition to instructing the fintech entity to cease and desist from financing activities, the banking regulator noted that it is also conducting a separate investigation into any possible regulatory violations and deficiencies involved from the banks concerned. However, it has allowed JM Financial Products to continue providing service to its existing loan accounts via the regular collection and recovery process.

The RBI noted in an official statement, “The actions were necessitated due to certain serious deficiencies observed in respect of loans sanctioned by the company for IPO financing as well as NCD (Non-Convertible Debentures) subscriptions.”

Notably, JM Financial Products provides a variety of loan products. It broadly functions under five verticals, namely, capital market financing, bespoke financing, retail mortgage financing, financial institution financing, and real estate financing.