JM Financial provides insights on violations with regulatory norms and governance concerns following the RBI directive.
JM Financial Products has been stopped from providing loans against shares and debentures by the Reserve Bank of India. JM Financial reviewed the order and believes there were no major problems with its loan approval process. The company claims it did not break any rules and has good governance practices. JM Financial will keep serving its current customers as per RBI guidance.
A spokesperson from JM Financial said the company has been funding IPOs for 20 years. The IPO financing is short-term and self-liquidating. The spokesperson mentioned that taking a Power of Attorney (POA) is a risk containment measure in IPO funding. This practice is common in the industry and is legal.
He stated that JM Financial will fully cooperate with the central bank's special audit program and clarify its stance. The RBI prohibited JM Financial Products from approving and distributing loans for initial public offerings (IPOs) and debenture subscriptions. This action was taken because of significant issues found in the loans provided by the company for IPO funding and NCD subscriptions. The RBI conducted a brief review of the company's records based on information from SEBI.
The company was found to have assisted a specific group of customers in bidding for IPO and NCD offerings by providing borrowed funds during a limited review. The credit assessment process was found to be superficial, with financing being granted against minimal margins. Furthermore, the company managed the subscription applications, demat accounts, and bank accounts of these customers using a Power of Attorney and a Master Agreement without their direct involvement in the subsequent operations, as stated by the RBI previously.
The RBI is currently investigating any regulatory violations and deficiencies by banks independently. Business restrictions will be reconsidered after a special audit conducted by the RBI and once the identified deficiencies are rectified to the RBI's satisfaction.
About Author
Vishnu
Founder & Managing Director of Investor Diary
I, Vishnu Deekonda, am dedicated to providing the proper financial education to every individual interested in becoming financially independent through intelligent investments.
I have trained people to build financial independence and observed people had got many myths about investing for beginners. I want to prove to such individuals that these myths are the bottlenecks to a successful trading portfolio. I wanted to share the knowledge I have gained through a decade of experience with the people willing to build a healthy stock return with less or no risk.
I am a course creator for InvestorDiary and am on a mission to provide every course one needs to master to build a healthy portfolio for stocks. I shall also be sharing courses on IPOs, mutual funds, stocks trading and other core areas of investing crisply and clearly.
Every course you buy from InvestorDiary will be worth every penny you have invested in buying one. I wanted every individual to learn by practicals, where I shall help every learner walk through the deep analysis of every concept you need to understand before you start trading.
Customer retention is vital, and we ensure to provide value to the customer through our courses. We believe that the proper knowledge shared with the users will be a successful marketing option; it brings the potential audience to learn more about trading. We feel privileged to make more content videos to help every user learn and earn more.
.Leave a comment
FAQ's
