After the release of the web series named Scam 1992, the one name which is trending in India is Harshad Mehta. Now, Who Harshad Mehta is? What he did exactly? In this article, we will explain about him in brief.
One of the biggest scams that strikes hard to India in 1992 by Harshad Mehta AKA “Big Bull” of India. Harshad Mehta was born in a middle-class Jain family of Gujrat in 1954 and spent his childhood in Mumbai. He completed his Bachelor’s in commerce from Lajpatrai College in Mumbai. Harshad tried his luck in many jobs like a diamond, accountant, etc.he found his major fortune in the Indian stock market only. Mr. Mehta started his career after graduation as a salesman in the New India Assurance Company (NIACL). After a few years of hustle and after not getting the geek he showed his interest in the share market and joined a brokerage firm B.Ambalal & Sons where he worked as a jobber for the broker P. D. Shukla. As time passes people start recognizing him as Amitabh Bachan of the Stock market. In 1984, Harshad Mehta started his brokerage firm and named it Growmore Research and Asset Management.
He actively started his trading in the market in 1986 and by the year 1990, people started joining him and they were investing with his firm. In the mean years, he got some big shot clients like then minister Mr. P. Chidambaram. After getting a veteran in the market he started to manipulate the market, he manipulated the share price of Associated Cement Company (ACC) from Rs.200 to Rs.9000 in nearly just 3 months.
Now the question is where the scam started?
Till 1990, banks were not allowed to invest in the equity markets. Yes, they were expected to post profits and retain a certain ratio (threshold) of their assets in the Government’s fixed interest Bonds. Mr. Mehta smartly brought the capital out of the banking window and pumped this money into the share market. He promised the banks a higher rate of interest than the normal ongoing. He asked them to transfer the amount into his account, under the belief of buying securities for them from other banks. At that time, a bank had to go through a broker to buy securities and forward bonds from other banks. Mehta got the idea from there only to use this money temporarily into his account to buy shares. Now he started to boost the price of certain shares of good already established companies like (ACC, Sterlite Industries, and Videocon ) when the market cruise on its best he Eventually sells the shares and passes on a part of the proceeds to the bank and keeps the rest into his pocket.
To carry out the scam, the deliveries of security and payment were made through the help of the broker only, for example, one seller handed over the security to the broker and now the broker pass them to the buyer and the buyer gave the cheque to the broker, now the broker made the payment to the seller. The buyer and the seller would not even know who they had traded with, the broker is going to be the only mediator between these two
Another instrument used in a big way was the Bank Receipt (BR). The confirmation of security sale is the BR, it's like a receipt received by the selling bank. i.e. the seller of securities gave the buyer of the securities a BR. A BR promises to deliver the securities to the buyer and also states that, in the meantime, the seller holds the securities in the trust of the buyer. Mehta cleverly found a bank that was providing him the fake BR or BRs not backed by any government securities. Too small and not very well known banks – the Bank of Karad (BOK) and the Metropolitan Co-operative Bank (MCB) – came in handy for this purpose. Once these fake BRs were issued, once the money was invested in the share market and was sold in profits, he returned the money to the banks.
This was all the tricks MR. Mehta was using it to boost the market and people started calling him the “Big Bull” of Dalal Street, this all kept on going for a long time until Sucheta Dalal showed her interest in it.
Sucheta Dallas was a Young enthusiastic financial journalist, she got the tip about the SBI BR frauds. Sachet kept on digging about this and found all the scams of Harshad Mehta.
On 23rd April 1992, journalist Sucheta Dalal exposed the illegal ways of Harshad Mehta in Times of India about how Mr. Mehta was using the bank money into the share market.
Just after the article Banks realizes that they were holding the BRs of no value at all. The chairman of Vijaya Bank committed suicide after the scam exposer came out, who was found guilty of having issued checks to Mehta and knew that he will lose all the reputation which he earned in the market.
One late night under custody in Thane prison MR. Harshad Mehta. He complained of chest pain and was admitted to the Thane Civil Hospital. He died with the following pain, at the age of 47, on 31st December 2001, he left behind the biggest scam of the Indian finance history.
To keep yourself away from these scams you need to upgrade youself so that you can be safe in the Stock Market and for that you need to join Stock Marrket Course In Jaipur to learn about the Stock Market
This man was the Harshad Mehta from a basic middle-class family who dreamed of a big house and dived into the ocean of the finance market and brought the tornado into that ocean. People built their fortune with Mr. Mehta, but in the end, he was the culprit and journalist Sucheta Dalal brought the light on to his scams of more than Rs 4000 crore.
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