- JM Financial’s share price dropped by 19% after RBI banned them from giving loans for buying shares and debentures.
- RBI found some issues with JM Financial’s loan practices, especially regarding loans for Initial Public Offerings (IPOs).
- JM Financial denied any wrongdoing but investors got worried, leading to a further decline in their share price.
JM Financial, a company that gives loans for various purposes, saw a big drop in its share price recently.
The share price fell by 19% after the Reserve Bank of India (RBI), which is like the boss of banks in India, stopped JM Financial from giving loans for buying shares and debentures.
They said JM Financial didn’t follow the rules properly and had some problems with how they were running things.
This hit JM Financial hard because a good chunk of their loans, about 6%, were for buying shares and debentures. This kind of loan helps people invest in companies by borrowing money.
But now, the RBI has said JM Financial can’t give out these loans anymore.
The RBI also said JM Financial can’t give loans to people who want to buy shares when a company first starts selling them to the public.
This is called an Initial Public Offering (IPO). The RBI said they had to do this because JM Financial wasn’t doing things right when giving out these loans.
JM Financial tried to defend themselves, saying they didn’t do anything wrong. They said they followed all the rules and didn’t break any laws.
They also said they always act honestly and with integrity. But the RBI didn’t agree with them.
One big issue was that JM Financial was helping some customers buy shares using borrowed money, and this wasn’t allowed according to the rules.
The RBI found out about this after looking at some documents from another organization called the Securities and Exchange Board of India (SEBI).
SEBI keeps an eye on how companies trade shares and debentures in India.
Despite JM Financial’s efforts to explain themselves, their share price continued to fall.
This is because investors got worried about what might happen to the company if they couldn’t give out these loans anymore.
JM Financial’s share price drop was bad news for them, but it also affected their customers who had taken loans from them.
People were worried about what would happen next and if JM Financial would still be able to help them.