RBI takes actions against JM Financial Products Limited, halting current operations

The RBI has necessarily taken action against the JMFL after concurrently examining the company's reviews and audits.

RBI takes actions against JM Financial Products Limited, halting current operations

New Delhi: The Reserve Bank of India in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, directed JM Financial Products Limited (JMFPL or ‘the company’) to cease, with immediate effect, from doing any form of financing against shares and debentures, including sanction and disbursal of loans against Initial Public Offering (IPO) of shares as well as against subscription to debentures.

The Company shall, however, continue to service its existing loan accounts through the usual collection and recovery process.

This action is necessitated due to certain serious deficiencies observed for loans sanctioned by the company for IPO financing as well as NCD subscriptions. The RBI carried out a limited review of the books of the company based on the information shared by the Securities and Board of Exchange.

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During the limited review, it was observed, inter alia, that the company repeatedly helped a group of its customers to bid for various IPO and NCD offerings by using loaned funds. This inspection held many other eye-catching sceptics.

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The business restrictions that are now imposed, will be reviewed upon the completion of a special audit to be instituted by the RBI and after rectification of the deficiencies to the satisfaction of RBI. Further, these business restrictions are without prejudice to any other Regulatory or Supervisory action that may be initiated by RBI, against the company.

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