JM Financial share price decreases by 19%: On Wednesday JM Financial’s share price decreased by 19 percent after the news from the Reserve Bank of India that JM Financial Products Ltd. was prohibited by the Reserve Bank of India (RBI) from providing loans secured by shares and debentures due to regulatory and governance shortcomings.
JM Financial share price decreases by 19%:
What Does JM Financial Do
JM Financial is an integrated and diversified financial services group. The Group’s primary businesses include
(a) Investment Bank (IB) shall cater to Institutional, Corporate, Government, and Ultra High Networth clients and includes investment banking, institutional equities and research, private equity funds, fixed income, syndication and finance;
(b) Mortgage Lending includes both wholesale mortgage lending and retail mortgage lending (home loans, education institutions lending, and LAP);
(c) Alternative and Distressed Credit includes the asset reconstruction business and alternative credit funds; and
(d) Asset management, Wealth management, and Securities business (Platform AWS) shall provide an integrated investment platform to individual clients and include wealth management business, broking, PMS, and mutual fund business.
Why RBI bans giving loans against shares
According to the RBI, significant flaws in loans approved by the company for IPO funding and (non-convertible debenture) subscriptions made its intervention necessary.
“In addition to breaching regulatory guidelines, the company has significant governance concerns that, in our opinion, are detrimental to the interests of the customers,” stated RBI.