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Business EconomyPosted at: Mar 6 2024 5:18PM


No material deficiencies in loan sanctioning process & not violated applicable regulations: JMFPL

New Delhi, Mar 6 (UNI) A day after the RBI barred JM Financial Products Limited from financing against shares and debentures, the company on Wednesday said there have been no “material deficiencies” in their loan sanctioning process and also they have not violated the regulations.
In a clarification to the stock exchanges, JMFPL said “we wish to state that after careful and detailed review of the said order (from RBI) which pertains to IPO financing business, JMFPL believes that there have been no material deficiencies in their loan sanctioning process and has not violated the applicable regulations.”
JMFPL further reaffirms that there have been no governance issues whatsoever and the conduct of all its business and operational affairs are in bonafide manner and shall continue to service its existing customers as advised by the RBI. The company will fully cooperate with RBI in their special audit and also explain its position to RBI.
The Central Bank yesterday barred JMFPL to cease and desist, 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, the RBI had said in its order.
This action was necessitated due to certain serious deficiencies observed in respect of 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 on the basis of the information shared by the Market Regulator Securities and Exchange Board of India (SEBI).
JMFPL said the company has been in the business of funding IPOs over the last two decades. 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 and this practice of taking PoA is prevalent across the industry and is perfectly legal.
Being this business constituting small portion of net total income, JMFPL said the impact of the above RBI order on the company “in monetary terms is not expected to be material”.
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