Reserve Bank of India is showing very strictness on finance companies these days. Especially due to financial irregularities in loan giving companies, RBI has taken major decisions in the last few months. After action against Paytm and IIFL, now the central bank has shown strictness on JM Financial Products Limited JMFPL. RBI has banned JM Financial from giving loans against shares and debentures.
The Reserve Bank has also banned the approval and distribution of loans against Initial Public Offering IPO of shares on JM Financial from March 5. RBI says that the company’s accounts were reviewed on the basis of information provided by SEBI, which revealed that there were many irregularities in the process of giving loans for IPO financing and NCD subscription.
RBI found that JM Financial used the loan amount to help some of its customers bid for IPO and NCD offerings. Apart from this, subscription applications, Demat accounts, bank accounts were all being operated by the company using power of attorney and master agreement received from the customers. Along with opening bank accounts through power of attorney, the company was also working as an operator of bank accounts.
Only after the action of RBI, the company’s shares fell by 10% and closed at Rs 85.50. The 52 week high of the share is Rs 114.85 and 52 week low is Rs 57.85. The market cap of the company is Rs 8170 crore.
JM Financial Products Limited is a merchant banker company. It provides services such as capital raising, mergers and acquisitions, private equity and restructuring advisory to Indian and multinational corporate clients in the domestic and international markets.
After Paytm and IIFL, RBI took action on another finance company, shares fell by 10% In the last few days, the Reserve Bank has taken strict action against many financial companies. Due to irregularities in giving loans, RBI has now taken action against merchant banker JM Financial.