JM Financial shares crash over 15%, IIFL plunges another 20% amid RBI's crackdown

Shares of JM Financial crashed more than 15% on Wednesday as the stock reacted to curbs imposed by the Reserve Bank of India.

On Tuesday evening, the RBI imposed restrictions on JM Financial Products barring it from doing any form of financing against shares and debentures.

RBI imposes curbs on JM Financial Products

The Reserve Bank on Tuesday imposed restrictions on JM Financial Products Ltd after finding that the company indulged in various manipulations, including repeatedly helping a group of its own customers to bid for various IPOs by using loaned funds.

In a major regulatory action, the central bank has barred the systemically important non-deposit-taking NBFC from providing any kind of financing against shares and debentures, including sanction and disbursal of loans against Initial Public Offering (IPO) of shares as well as against subscription to debentures.

The restrictions are with immediate effect. The central bank said it observed 'serious deficiencies' in respect of loans sanctioned by the company for IPO financing and NCD subscriptions.

Meanwhile, IIFL Finance crashed for the second day in a row, locked in a lower circuit of 20%, extending Tuesday's losses after RBI action.

RBI bars IIFL Finance from disbursing gold loans; flags supervisory concerns

In a statement on Monday, the RBI said it has directed IIFL Finance Ltd "to cease and desist, with immediate effect, from sanctioning or disbursing gold loans or assigning/ securitising/ selling any of its gold loans".

The company can, however, continue to service its existing gold loan portfolio through the usual collection and recovery processes, it added.

Also Read: RBI bars JM financial from providing any financing against shares, debentures; cites serious deficiencies