India's JM Financial shares slide on c.bank action, says no deficiencies in loan sanctioning (updated)

JM Financial

06/03/2024 04:03

(Adds details throughout)
       BENGALURU, March 6 (Reuters) - 
    Shares of India's JM Financial fell nearly 19% on Wednesday
after the central bank 
    barred
     the company's unit from giving out loans against shares and
debentures, even as it said there were no deficiencies in the
loan sanctioning process of its unit.
  
    "We strongly believe that there have been no material
deficiencies in our loan sanctioning process. Further, the
company has not violated applicable regulations," a spokesperson
said in a statement on the Reserve Bank of India's (RBI) action
against JM Financial Products.
    "We also wish to reaffirm that there have been no governance
issues whatsoever and we conduct all our business and
operational affairs in a bonafide manner."
    JM Financial's shares were last down 13.9% at 82.15 rupees.
    The RBI on Tuesday cited regulatory violations and
governance concerns as reasons for its action against JM
Financial Products.
    The RBI reviewed the company's books, which showed it had
repeatedly helped a group of its customers to bid for various
IPO and non-convertible debenture offerings using loaned funds.
JM Financial in a separate statement refuted the allegations.
    The RBI has stepped up oversight of banks and non-bank
finance companies over the last few years to ensure compliance
of its norms and protect customer interest.
    The central bank on Monday ordered non-bank finance company
IIFL Finance  IIFL.NS  to stop giving out gold loans, citing
"material supervisory concerns" in its gold loan portfolio. Its
shares have dropped 36% since the order.
    Meanwhile, India's market regulator, Securities and Exchange
Board of India (SEBI), is set to come out with an order on JM
Financial for its alleged role in inflating IPO subscription
numbers, The Economic Times newspaper reported.
        The company, however, has not received any notice from
the SEBI, who has "sought some information as part of a
fact-gathering exercise," a JM Financial spokesperson said.
  

 (Reporting by Nandan Mandayam in Bengaluru; Editing by Sonia
Cheema)
 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))