After the web series Scam 1992 was released, the one name trending in India is Harshad Mehta. Now, Who Harshad Mehta is? What did he do exactly? In this article, we will explain about him in brief.
One of the biggest scams that struck India hard in 1992 by Harshad Mehta, AKA Big Bull&rdquo 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. After graduation, Mr. Mehta started his career as a salesman at the New India Assurance Company (NIACL). After a few years of hustle and 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. People start recognizing him as Amitabh Bachan of the Stock market as time passes. In 1984, Harshad Mehta started his brokerage firm and named it Growmore Research and Asset Management.
He actively started trading in the market in 1986, and by the year 1990, people had 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?
Until 1990, banks were prohibited from investing in the equity markets. 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 in his account to buy shares. Now, he started to boost the price of certain shares of already established companies like (ACC, Sterlite Industries, and Videocon ) when the market cruised at its best; he Eventually sold the shares and passed on a part of the proceeds to the bank and kept 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 passes 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 buyer's trust. Mehta cleverly found a bank providing him with fake BRs or BRs not backed by 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 continued 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 digging into this and found all the scams of Harshad Mehta.
On 23rd April 1992, journalist Sucheta Dalal exposed the illegal ways of Harshad Mehta in the Times of India about how Mr Mehta was using bank money in the share market.
Just after the article, Banks realizes they were holding the BRs of no value. The chairman of Vijaya Bank committed suicide after the scam exposure came out; he was found guilty of having issued checks to Mehta and knew that he would lose all the reputation he had 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 yourself so that you can be safe in the Stock Market, and for that, you need to join share trading course in Delhi to learn about the Stock Market
This man was 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 to light his scams of more than Rs 4000 crore.
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