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Reserve Bank Imposes Restrictions on JM Financial Products Ltd

The Reserve Bank on Tuesday announced that JM Financial Products Ltd is prohibited from providing any form of financing against shares and debentures, including sanctioning and disbursing loans against initial public offerings, effective immediately. This move comes as a response to certain serious deficiencies observed in relation to loans sanctioned by the company for IPO financing as well as NCD subscriptions.

With this directive, JM Financial Products Ltd must cease and desist from providing any financing against shares and debentures, including loans against IPOs and debentures subscriptions. However, the company is allowed to continue servicing its existing loan accounts through the regular collection and recovery process.

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The Reserve Bank stated that the business restrictions imposed on JM Financial Products Ltd will be subject to review after the completion of a special audit to be conducted by the RBI. The restrictions will be lifted only after the deficiencies are rectified to the satisfaction of the Reserve Bank.

The RBI conducted a limited review of the company’s books based on information provided by the Securities and Exchange Board of India (SEBI). The situation will be closely monitored to ensure compliance with regulatory requirements and to safeguard the interests of investors and stakeholders.

Overall, this development underscores the importance of regulatory compliance and risk management in the financial sector. It serves as a reminder for financial institutions to adhere to strict guidelines and maintain transparency in their operations to avoid regulatory sanctions.

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