Discover the shocking truth behind JM Financial’s plummeting shares as the Reserve Bank of India takes decisive action. Dive into the scandal, governance concerns, and management’s response in this gripping exposé!
JM Financial Faces Regulatory Scrutiny: Shares Drop 10%
Shares of JM Financial Ltd. experienced a significant decline of 10% on Wednesday’s trading session, albeit recovering from a lower circuit of 20% earlier in the day. The company’s stock faced pressure following regulatory actions from the Reserve Bank of India (RBI) against its subsidiary, JM Financial Products.
In response to the RBI’s directives, JM Financial Products was instructed to immediately cease all forms of financing against shares and debentures. The central bank’s scrutiny stemmed from observed instances where the company facilitated certain customers in bidding for initial public offerings (IPOs) and non-convertible debentures (NCDs) using borrowed funds. Additionally, the RBI highlighted governance concerns within the company.
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Financial Insights
According to the company’s statement to the stock exchanges, the total income generated from IPO financing business in the first nine months of financial year 2024 amounted to approximately ₹7 crore. This figure represents around 1.5% of JM Financial Products’ total net income and 0.3% of the consolidated net income of JM Financial Ltd. The company emphasized that the monetary impact of the RBI’s order is not anticipated to be significant.
Ashu Madan, Managing Director of JM Financial, expressed confidence in the company’s loan sanctioning process following a thorough review of the RBI’s order. He defended the practice of obtaining Power of Attorney (POA) from clients as a risk management measure, asserting its legality and prevalence in the industry. Madan conveyed these sentiments through a post on social media platform “X.”
Despite the challenges posed by regulatory scrutiny, JM Financial remains committed to addressing concerns and upholding industry standards. The company’s stock closed 10.4% lower at ₹85.4, reflecting investor sentiment amid ongoing developments. As regulatory oversight intensifies, market participants are attentive to compliance requirements to ensure stability and transparency within the financial sector.
Bhaarat Bulletin’s Shikha Rai, Bimal Dev, and BSE, NSE have contributed to the above report
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