Real story of Scam 1992 | Harshad Mehta Scam

March 2, 2021
March 2, 2021 admin

Real story of Scam 1992 | Harshad Mehta Scam

Harshad Mehta is an Indian broker and The big bull of India. In 1992 he arrested in financial scam with his brother Ashwin Mehta. Read the full article to understand the loopholes of the system and how Harshad used that.

Harshad Mehta son of Shantilal Mehta and Rasilaben Mehta also known as The BIG BULL of India. Harshad did his from Lala Lajpat Rai College of Mumbai. After that, he worked in many companies at the same time he interested in Share market. Then He left his job and joined Ambalal Broker, and from him Harshad learn technical and fundamental stock market. In 1984 he started a Grow More Research and Asset Management with his brother Ashwin Mehta and become a broker at BSE. 

Loopholes of Government policies 

Harshad found a Loophole in banking and government policies and used that loophole as a scam. He used Ready Forward Deal (RFD) Method in his scam.
                 The government of a country issues bond and Securities for Investor to overcome expenses and loan and after a particular period government payback that amounts with interest to inveator. That time all banks has to invest at this securities because all bank must invest a certain amount in this bonds and securities and whenever any bank need financial help they montage their govt securities to another bank as short term loan (Money market). This whole RFD happen with helps of brokers, where brokers are the mediator between two banks who found buyers and sellers of securities.

How Scam started

Harshad is one the money market broker, who had to find buyer and sellers of bank securities. Harshad took securities and to ask for some time and the same he did with another bank he took the money and ask some time form them also. And used that money and securities in share market to manipulate market because that time Harshad had good goodwill in BSE. For that money, he manipulates small companies whose share price is less than 20rs and deals with CEO’s of those companies for profit share. 
Some of the banks and the amount that CBI found misappropriate were

  • National Housing Bank (NHB) – 1200 CR INR
  • State Bank Of Saurashtra – 175 CR INR
  • SBI Capital Markets LTD – 175 CR INR
  • Standard Chartered Bank – 300 CR INR

                   These all continued many years, but in 1992 RBI and CBI got a clue about this scam. CBI arrested Harshad Mehta with his brother and banned from the stock market and his investors and Clients got a huge loss. Harshad and his brother Ashwin Misappropriating more than 2.5 million shares of 90+ companies. Value of those shares was around INR 250 crore (15 billion USD). Harshad was charged with 72 criminal and 600 civil action suits. Harshad named many ministers in that Scam including former Prime minister P.V Narasimha Rao but he didn’t give any proof.

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