RBI Restricts ‘JM Financial Products Limited’ from Engaging in Any Form of Financing Against Shares and Debentures
- News|Blog|FEMA & Banking|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 7 March, 2024
Latest from Taxmann
Press Release: 2023-2024/2006; Dated: 05.03.2024
RBI has barred ‘JM Financial Products Limited’ from doing any form of financing against shares and debentures after it found ‘serious deficiencies’ that are detrimental to the interest of its customers during a review of its books. This includes sanctioning and disbursing loans against the Initial Public Offering (IPO) of shares and subscription to debentures.
With immediate effect, ‘JM Financial Products Limited’ has been asked to ‘cease and desist’ from doing any form of financing against shares and debentures. However, the RBI has allowed the company to continue to service its existing loan accounts through the usual collection and recovery process.
During the limited review, the RBI observed that the company repeatedly helped a group of its customers to bid for various IPO and NCD offerings by using loaned funds. The credit underwriting was found to be perfunctory, and financing was done against meagre margins.
The application for subscription, the demat accounts and the bank accounts were all operated by the company using a Power of Attorney (POA) and a Master Agreement obtained from these customers without their involvement in the subsequent operations. Consequently, the company was able to effectively act as both lender and borrower.
RBI found these actions to be in violation of its regulatory guidelines. Also, it found serious concerns on governance issues in the company. These restrictions 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.
Click Here To Read The Full Press Release
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
