Owing to the banking regulator’s decision, JM Financial Products is barred from sanctioning and disbursing loans against Initial Public Offering (IPO) of shares.

JM Financial share price: What RBI said on the action

RBI attributed its action to certain serious deficiencies observed with respect to loans sanctioned by the company. RBI said, “Apart from being in violation of regulatory guidelines, there are serious concerns on governance issues in the company, which in our assessment are detrimental to the interest of the customers.”

JM Financial share price: What the company said on RBI action

JM Financial Group denied any material deficiencies in its loan sanctioning process, It said, “After careful and detailed review of the order issued by the RBI on the action against JM Financial Products Ltd, we strongly believe that there have been no material deficiencies in our loan sanctioning process. Further, the Company has not violated applicable regulations. 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. The company shall continue to service its existing customers as advised by the RBI.”

On the IPO issue raised by the RBI, the company said, “The IPO financing product is short-term and self-liquidating in nature. In the context of IPO funding, the Power of Attorney (POA) is taken as a risk containment measure only. The practice of taking POA is prevalent across the industry and is perfectly legal. We will fully cooperate with RBI in their special audit initiative and explain our position to RBI.”