JM Financial, an Indian investment banking firm, stated on Wednesday that its unit's loan sanctioning process was sound. This came after the Reserve Bank of India (RBI) barred the firm's unit from offering loans against shares and debentures on the previous day.
Earlier the central bank of India had taken action against JM Financial Products, citing regulatory breaches and governance issues, as per a report by Reuters.
At 9:30 am, the shares of IB firm were trading at Rs. 82 price level, down by almost 14 per cent or 13 points on NSE.
"We strongly believe that there have been no material deficiencies in our loan sanctioning process. Further, the company has not violated applicable regulations," as per a spokesperson quoted in the report.
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While reviewing the company's records, the central bank discovered that it had consistently assisted a group of its clients in bidding for different IPOs and non-convertible debenture offerings by utilizing borrowed funds. "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 spokesperson added.
Over the past few years, the RBI has been closely watching banks and non-bank finance companies (NBFCs) to make sure they follow its regulations and safeguard customer interests.
This week, RBI had also instructed IIFL Finance to cease issuing gold loans due to "material supervisory concerns" regarding its gold loan portfolio. This announcement has caused its shares to plummet by almost 40 per cent.
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