How does credit card deactivation affect your credit score?
Understanding the relationship between credit cards and credit scores is essential before understanding the impact of credit card deactivation on the credit score.
The Reserve Bank of India (RBI) on Tuesday barred NBFC, JM Financial Products Limited, (JMFPL) from sanctioning fresh loans to borrowers for bidding in IPOs, buying shares and subscribing to debentures. The apex bank took this step after a “limited review” of the books of JM Financial found a “deficiency” in the loans sanctioned for such purposes.
The central bank also accused that JMFPL managed to get the Power of Attorney (PoA) and a Master Agreement signed by its customers without their know-how and used it to gain access to their demat and bank accounts. The central also said that the non-banking financial institution used to arrange new bank account openings for its customers and used the POA to operate such customers accounts as well.
The financial market regulator also said that the NBFC repeatedly helped a group of customers to bid in IPOs by using money given as loans.
According to the RBI, such activities are in grave violation of the central bank’s regulatory guidelines. The apex bank also said, “There are serious concerns on governance issues in the company which in our assessment are detrimental to the interest of the customers.”
The RBI gave these directions following a “limited review” of the books of the NBFC after the market watchdog, Sebi sensed some wrongdoing in the company. The apex bank also said that it will conduct a special audit of the company and restrictions imposed on JMFPL remain in force until further order.
On Tuesday, March 05, 2024, JM Finnacial’s share plunged two per cent on the BSE and closed at Rs 95 per share.
Off late, the RBI has really tightened its noose on regulatory guidelines violations by NBFCs and payment banks in the industry. Only yesterday, the apex bank barred another NBFC, IIFL Finance from fresh sanction of gold loans. Before this on January 31, 2024, the central bank barred Paytm Payments Bank from accepting fresh deposits. The payments bank had already been barred from onboarding new customers since 2021.