India cenbank bars JM Financial Products from financing against shares, debentures (updated)

JM Financial

05/03/2024 12:51

(Adds details from RBI statement throughout)
       BENGALURU, March 5 (Reuters) - India's central bank on
Tuesday barred JM Financial Products from giving out credit
against shares and debentures, because of regulatory violations
and governance concerns.
    The action against the unit of investment banking firm JM
Financial  JMSH.NS  is the latest in the regulator's crackdown
on non-bank lenders.
    The financial services firm has been barred from giving out
loans against initial public offering of shares and against
subscription to bonds, but it can continue to service existing
loan accounts through the usual collection and recovery process,
the Reserve Bank of India (RBI) said.
    "This action is necessitated due to certain serious
deficiencies observed in respect of loans sanctioned by the
company for IPO financing as well as NCD (Non-convertible
debenture) subscriptions," the RBI said.
    The central bank reviewed the company's books, which showed
it had repeatedly helped a group of its customers to bid for
various IPO and NCD offerings by using loaned funds. 
    However, the credit underwriting was found to be
"perfunctory," and financing was done against meagre margins,
the RBI said. 
    "Apart from being in violation of regulatory guidelines,
there are serious concerns on governance issues in the company,"
the RBI said.
        JM Financial did not immediately respond to a Reuters'
request for comment.
        The RBI 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.   
    
    

 (Reporting by Chris Thomas in Bengaluru; Editing by Janane
Venkatraman)
 ((chris.thomas@thomsonreuters.com;))