Harshad Mehta Scam -1992 | Big Bull of stock market - Explained | हिंदी

              Harshad Mehta Scam -1992

Whenever we here the name of Harshad Mehta in our minds the same thing happens with that scam.Let's see how it made India's stock market scam done. Because recently one of them web series is created.

Harshad Mehta to India known as the biggest scam in the history Harshad also took bribe from the prime minister of India was accused.Let's talk about it today. Friends Harshad Mehta Was born in 1954 India.Harshad Mehta was educated at his school was from Ray Pur India. Complete your schooling after doing so, Harshad came to Mumbai. Did his BA from Lala Lajpat Ray College. After the completing the degree Mehta has worked in many companies like garments etc.. But till then they did not even know that they were coming, What are you going to do. 

After some time, Harshad was transferred to new India Insurance Company working as a sales person. Harshad got a chance to visit the stock Market here. For a full knowledge of and very little time. in each case,they have seized it, despite obstacles we can scarcely imagine understood.That's how he joined  B. Ambalal Broker.Then J.L Shah and Nandalal Seith become a broker. 

In 1984, Harshad started a company with his brother took over Grow More Research & Asset Management Company. and becomes a broker of BSE, he started his own business as a broker. Harshad Mehta in his scam RF, means Ready Forward Deal laid the foundation stone. Basically the Government to convert the cost of some project. The securities we offer are Government. Securities say such as the Government bound through which. To Control the Government at its own expenses. They take money and in return that money. The Government gives some money to all investors. As all securities to banks you have to invest some money. its used to avail loan for short term.

Whenever a bank needed a funds, it used to sell it's Government Securities to the other bank and it used to avail loan for the short term. And after a few days, the banks would have  it's govt securities back after returning the loan at the agreed interest rate. In simpler term, it's like going to the jeweller and borrowing money for your jewelry and then after a few days, you get your jewelry back from the jeweller after returning the money with interest. Similarly, in Ready Foreword Deal, one bank used to provide short term loan to the other bank. In short, Ready Foreword Deal was a kind of short term loan instrument for banks. in Ready Foreword Deal, broker used to work as a Mediator for banks. There jobs was to find buyers for those who want to buy and find sellers for those who want to sell. Hrshad was also a broker and hence, work as a Mediator for the banks.

There were some  loopholes in the RF deal. one could have made money with the help of these. Harshad was very much aware of these loopholes, and he started using them  for his personal benefit. Just assume there are 4-banks A B C & D.. Harshad used to took for buyers to sell the securities of bank A. Then he used to go to bank B, take the money of securities and ask for some time to get the seller.He used to keep the security given from the bank A, as well as the cash from bank B. According by the Guideline issues by the RBI, on bank was supposed to issue direct cheque on the name of broker. However in this case, the banks were issuing cheques on the name of broker directly.i.e. on Harshad Mehta's name. 

Surprisingly most of the banks weren't even aware that they were making transaction with witch bank because banks direct deal with Harshad Mehta. This is the reason why Harshad used to ask banks to issue cheques on his name. As a broker, Harshad has been doing quite well in the stock market for some years. Besides Harshad was quite popular in the stock market those days. But Hrshad took disadvantage of this opportunity. 

He used this money received from the banks to manipulate the stock market by raising the stocks' prices. When bank A used to ask for securities, then Harshad used to look for another bank seeking to buy govt securities. Supposedly if bank A was also looking for securities then Harshad used to go to bank C and ask them for money. He then asked for some time to return the money. in the meanwhile, he returned the same money to the bank A. To complete the deal of bank B&C, he used to adopt the same deal. When these banks used to ask for their  money, then he used to deal with other banks. 

Harshad used the RF deal as a chain system which helped him having loads of money in his hands. so we observed how, in a Ready Foreword Deal, a bank used to sell govt securities to the other for short term. When a bank used to sell  the bank securities to other bank for short term, then the bank used to give them a receipt instead of actual bank securities. This bank receipt clearly means that govt security has been sold out and the bank has got it's money. 

Harshad took one more step in his scam when he needed more money. He crossed all the limits and started making fake bank receipts with the help of few banks. Banks which wanted to buy govt securities, Harshad used to givr them the fake receipts. Banks used to hand over the money to Harshad thinking the bank receipt were original.

Harshad used this money to manipulate more stocks and took them a to higher level. Harshad managed to rise the ACC stock from Rs 200 to 9000. After seeing the sudden growth in the stock market, a lot of people started investing in stock market. This lead to the rise in the price of the stock in the share market.When stock market used to go up, Harshad used to sell his stocks,return the banks' fund, and get back its fake receipts. This went on till the price of the shares were rising, suddenly the price of shares started falling. 

Harshad started facing losses and he was not able to return the money of the banks. Then on 23rd April 1992, Journalist Sucheta Dalal exposed the scam of Harshad Mehta in TOI's article. This is how the banks came to know that the receipt given by Harshad were fake and they hold no value. The banking system suffered a loss of around 3000-4000 crore rupees. When this scam was exposed, the stock market was  crashed badly and a lot of investors suffered  huge losses.  

The chairman of vijaya Bank committed suicide right after the scam was exposed. Bank started asking Harshad for their money, but Harshad was not able to return the money due to the market crash. Before the scam was exposed, No one have an idea of Harshad Techniques or motive.

CBI Arrested Harshad Mehta on 9 Nov 1992. He was charged with 600 civil action suits & 70 criminal cases. Forever SEBI had banned him from investing in the stock market for ever. He was kept in thane jail and suddenly he felt pain in the chest and he breathed his last around 12:30 am in 31 December 2001. When Harshad died, there were still 27 cases pending against him. 

His lifestyle was like Bollywood star, Some magazines even called him the Amitabh Bachchan of stock the market.  He owned a see facing bungalow in Mumbai which had a golf  course & swimming pool. He was the biggest tax-pair of that time as he paid the tax around 26 crores. people also called him Big Bull of the stock market. Ketan Parkeh had joined his firm as a trainer only, he was also involved in many scam. in the next article, we will know about the Ketan Parkeh scam