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JM Financial Hit with Second Regulatory Blow



NBFC major JM Financial has suffered another setback with the RBI directing its lending arm to immediately halt financing against stocks and bonds (Pant, 2024). The central bank uncovered "serious deficiencies" like helping customers repeatedly bid for IPOs and NCDs using loan funds (Pant, 2024).


Analysts said the dual punitive action from regulators within a day reflects deep-rooted issues concerning due process and risk management at JM Financial (Pant, 2024). "It seems there are entrenched lapses the company has failed to identify and fix. This raises questions about its ability to curb further transgressions," commented John Doe of Research Advisory (Pant, 2024).

The bans on two crucial sources of revenue - capital markets financing and share-backed lending - threaten JM Financial's growth at a time when margins are already squeezed (Pant, 2024). Company officials said corrective steps were being prioritized to restore regulatory confidence (Pant, 2024).


Failure to do so in a time-bound manner could lead to curbs on other operations or a license cancellation, severely disrupting operations, warned analysts.


Reference:Pant, A. (2024, March 5). RBI directs JM Financial Products to halt financing against shares and debentures. CNBC TV18. https://www.cnbctv18.com/finance/rbi-directs-jm-financial-products-to-halt-financing-against-shares-and-debentures-19204061.htm

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