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HARSHAD MEHTA
- Harshad Shantilal Mehta was born on 29 July 1954, at Paneli Moti, Rajkot district, in a Gujarati Jain family. Mehta completed his B.Com in 1976 from Lajpatrai college Mumbai and worked a number of odd jobs for the next eight years.
- During this time, he got interested in the share market and after a few years, resigned and joined a brokerage firm.
- Over a period of ten years, beginning 1980, he served in positions of increasing responsibility at a series of brokerage firms.
HARSHAD MEHTA
- In 1984, Mehta was able to become a member of the Bombay Stock Exchange as a broker and established his own firm called GrowMore Research and Asset Management, with the financial assistance of associates, when the BSE auctioned a broker’s card.
- He actively started to trade in 1986. By early 1990, a number of eminent people began to invest in his firm, and utilize his services.
- During this period, especially in 1990–1991, the media portrayed a heightened deified image of Mehta, calling him “The Big Bull”.
THE SCAM THAT SHOOK INDIA
- Up to the early 90s, banks in India were not allowed to invest in the equity markets. Mehta cleverly squeezed capital out of the banking system to address this requirement of banks and pumped this money into the share market .
- He also promised the banks higher rates of interest, while asking them to transfer the money into his personal account, under the guise 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. party, for getting him off the scandal case
THE SCAM THAT SHOOK INDIA
- Another instrument used in a big way was the bank receipt (BR). In a ready forward deal, securities were not moved back and forth in actuality.
- Instead, the borrower, i.e. the seller of securities, gave the buyer of the securities a BR. The BR confirms the sale of securities. It acts as a receipt for the money received by the selling bank. Hence the name – bank receipt. It promises to deliver the securities to the buyer. It also states that in the mean time, the seller holds the securities in trust of the buyer
- Having figured this out, Mehta needed banks, which could issue fake BRs.
EXPOSED
- On 23 April 1992, journalist Sucheta Dalal exposed Mehta’s illegal methods in a column in The Times of India. Sucheta Dalal reveals Mehta’s Scam
- A typical ready forward deal involved two banks brought together by a broker in lieu of a commission. The broker handles neither the cash nor the securities, though that wasn’t the case in the lead-up to the scam.
EXPOSED
- When the scheme was exposed, banks started demanding their money back, causing the collapse. He was later charged with 72 criminal offences, and more than 600 civil action suits were filed against him. • Mehta and his brothers were arrested by the CBI on 9 November 1992 for allegedly misappropriating more than 2.8 million shares (2.8 million) of about 90 companies, Allegations of payment of bribe to India’s prime minister.
DEATH
- Mehta was under Criminal custody in the Thane prison. Mehta complained of chest pain late at night and was admitted to the Thane civil Hospital. He died following a brief heart ailment, at the age of 47, on 31 December 2001.
- Market watchdog, Securities and Exchange Board of India, had banned him for life from stock market-related activities.
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