🔶 The Full Story of Harshad Mehta Scam (1992)
🧑💼 Who was Harshad Mehta?
Harshad Mehta was a stockbroker who became famous in the late 1980s and early 1990s as the "Big Bull" of the Bombay Stock Exchange (BSE). He was known for driving stock prices sky-high, and people blindly followed his investment choices.
At his peak, he was seen as a market genius, but behind his success was one of the biggest financial scams in Indian history.
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💹 How Did the Scam Start?
The scam mainly involved manipulating the banking system.
🏦 Banking Loophole:
Banks often lend money to each other for short periods through something called Ready Forward (RF) deals. These deals use government securities as collateral.
Here's what Harshad Mehta did:
He worked with some banks (like SBI, UCO Bank) to get fake Bank Receipts (BRs) issued.
A BR is supposed to say, "We hold this security," but in reality, there were no securities.
Mehta used these fake BRs to get huge loans from other banks.
He then invested that money in the stock market, causing certain stocks to rise rapidly.
Some of the stocks he manipulated included:
ACC (Associated Cement Company)
Sterlite
Tata Iron and Steel (TISCO)
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💰 How Big Was the Scam?
The scam involved over ₹4,000 crore (about $1.3 billion at the time).
It was one of the largest financial frauds in Indian history and shook the foundations of both the stock market and banking sector.
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🕵️♂️ How Was He Caught?
In 1992, journalist Sucheta Dalal exposed the scam through an article in The Times of India.
Soon, investigations revealed that Harshad Mehta had misused the banking system and created artificial demand in the stock market.
The stock market crashed, and thousands of investors lost their life savings.
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⚖️ What Happened to Him?
Harshad Mehta was arrested by the CBI and faced multiple criminal charges.
He spent some time in jail and was later released on bail.
In 2001, he died of a heart attack in jail at the age of 47.
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📉 Aftermath of the Scam
India's financial system went through major reforms after the scam.
The Securities and Exchange Board of India (SEBI) was given more power.
Banking rules were tightened, and the way stock markets worked was changed for good.
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In Popular Culture
The scam inspired books, documentaries, and shows — most famously the web series: 🔹 Scam 1992: The Harshad Mehta Story (SonyLIV), based on the book by Sucheta Dalal and Debashis Basu.
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📌 Summary
Topic Details
Name Harshad Mehta
Profession Stockbroker
Scam Year 1992
Amount ₹4,000+ crore
Method Fake bank receipts, stock market manipulation
Caught By Journalist Sucheta Dalal
Died 2001 (in jail, heart attack)
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