JM Financial touches lower circuit after RBI bans it from financing against shares and debentures

JM Financial Share Price: JM Financial shares slipped around 20 per cent in morning deals on BSE on Wednesday (March 6, 2024) after the Reserve Bank of India banned the financial services company from giving loans against shares and debentures. JM Financial said that there was 'no material deficiencies' in its loan sanctioning process.

The stock of JM Financial, however, recovered a bit towards the end of the day and closed lower by 10.50 per cent, or Rs 10.03, at Rs 85.50.

The stock that closed trading at Rs 95.53 on Tuesday started the session on Wednesday at Rs 77.10, a 19.29 per cent slide overall. 

That was the day's low for the financial services company. 

What is RBI's ban on JM Financial?

On Tuesday, the Reserve Bank banned JM Financial from providing any form of financing against shares and debentures, including the sanction and disbursal of loans against an initial public offering, with immediate effect.

The RBI said that the company can continue to service its existing loan accounts through the usual collection and recovery process.

JM Financial on Wednesday said that it had a "careful and detailed review" of the RBI's order and that there was 'no material deficiencies' in its loan sanctioning process.

"After careful and detailed review of the order issued by the RBI on the action against JM Financial Products Ltd, we strongly believe that there have been no material deficiencies in our loan sanctioning process. Further, the company has not violated applicable regulations.

"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 company shall continue to service its existing customers as advised by the RBI," a JM Financial spokesperson said in a statement.

Jefferies on IIFL Finance 

It has double-downgraded the stock to Hold from Buy. The target price has been cut to Rs 435 from Rs 765.