All About Harshad Mehta Scam

All About Harshad Mehta Scam

Credit:Source thise image from Google

One man tricked the entire Dalal Street

Hello learners history books often mentioned India was called the golden bird in the old days before Britishers came and took over India it contributed almost 24% to the world's GDP but when they left it its GDP contribution to the world decreased to about 4% after independence and becoming a republic it started to amend its crippled economy on one hand the Indian government and its people have steadily worked towards strengthening the economy since independence then on the other hand rampant corruption and scams have eaten away the precious money of taxpayers from Satyam scam vegimal ayahs greedy act to nirav Modi scam India has seen a handful of such frauds over the past couple of decades these scams have been pulled out in almost every sector be it banking cricket world travel and tourism etc one such scam happened in the stock market world dude it is one of the most ferocious frauds in the stock market orchestrated by a broker named Harshad Mehta
Who is Harshad Mehta what did he do how he found loopholes in the Indian banking system and managed to do such a big scam in this video we are going to explain the tall let us begin with the early life story of Harshad Mehta born in a lower middle-class Gujarati family in 1954 her shots childhood was mostly spent and can't even Mumbai after completing his school and iPod chatters then he went on to obtain a bachelor's degree in commerce from Lajpat Rai College in Mumbai once he completed his graduation her she did a couple of jobs in several firms it was during this time that he developed a keen interest in the stock market after 1980 he decided to call it quits from his job at

New India Assurance Company to join stockbroker P Ambani after that he went on to be a stockbroker of popular figures such as JL Saha and Nandalal st. in the year 1984 her shot along with his brother inaugurated a firm by the name grew more research and asset management he started his brokering business after becoming an authenticated stock broker of PSE in the biggest scam of the stock market Harshad Mehta used the concept of ready forward we aren't aware of the stone in simple words in order to raise money and dedicated to several projects the government issues securities these are known as government securities a simple example is that of the government born as a part of raising money from their investors it issues interest in return at that time by rule all the banks ought to invest a certain sum of money in these government securities in a time of need a bank would say let's come in security to another bank and raise a short-term loan within the agreed period the former bank would pay the money with interest and acquire back its government securities from the ladder the process seems complicated not to worry let us take a real-life example for a better explanation suppose sham is a Newton of money an idea strikes him he takes some gold silver jewelry kept with him and go straight to a jeweler the jeweler agrees to keep the jewelry and gives sham alone the loan is given on pre-agreed interest and time period after a few days
When Shawn is capable of paying back the loan with interest he does it and takes back his jewelry from the jeweler similarly in ready forward deal one bank used to give short-term loans to another in place of government securities thus we can say our F deal was a short-term loan instrument for banks you must be thinking that if the loan was given and taken between the banks then what was the role of brokers in the rft between banks the brokers acted as mediators the main job of brokers was to keep track and find out banks who would either want to buy or sell their government securities when Harshad Mehta was one such broker who acted as a mediator in the FTL's but the concept of RF deals or Indian banking system at that time had certain loopholes these loopholes could be used to stockpile money by opting for some illegal means Herschel was well aware of these loopholes and he decided to take advantage of them for personal interest but how did he find these loopholes and convert it into an opportunity let us understand it suppose there are four banks a B C and D Harshad Mehta was working for Bank a that wanted to sell it's come in securities now it was his job to look for buyers for Bank II in order to send he would take the government securities from Bank a asking for some time to find the buyers at the same time bank B was looking for potential sellers of government securities her shed would approach Bank B take the money from it again asking some time to look out for a seller for Bank B the situation was that her ship had government securities of banking and money of Bank B and he used to keep them with himself for some time
According to a rule sanctioned by Reserve Bank of India no bank was allowed to issue any kind of check directly on the name of her broker the cheque could only be issued under the name of the bank which is buying the government securities but in this case the check was issued under the name of Harshad Mehta as most of the banks were kept in the dark they were unaware of the bank they were carrying out the transaction with because the bank would strike the deal with her shell he was a reputed and well-known broker those banks would invest their trust in him and issue the check under his name but he misused the trust and goodwill that he had in the market Harsha used the money fooled from the banks to manipulate the stock market after some days the bank that sold its come in securities would ask for its money from her shell under such a situation he would simply look out for some other banks who would be ready to buy government securities let's say Bank C is that other Bank that wants to sell off its securities her shed would approach Bank see take the money asking for some time to bring the government securities for it he would use the money taken from Banksy and give it to banking furthermore in order to complete the deals with Bank B & C he would look out for another Bank let's say Bank D to carry out a similar process he employed the same chain based master plan with other banks he worked as a broker of these banks completed their deal with chain work and made sure he was left with a whopping sum of money with himself we saw how government securities were sold by one bank to another and how the ready forward deal was carried out in this transaction the bank selling their government securities actually issued a bank receipt under the name of another Bank and not the actual securities the BR was to prove the transaction has been complete and the bank selling the government securities has received all its money when Hirsch had started to direct the pooled money towards stock market manipulation so he fell short I needed more now what well his greed did not stop there he went on to take a step further in the scam how you asked this time he asked several banks to make fake Bank receipts and started to employ his game plan Herschel used to give faith backed receipts to the banks who wanted government securities and in return he would get money but those who were of faith team he would use the money

Incorporated from those deals to put in the stock market and influence the stock prices the best example where he used his malicious trick to manipulate the stock prices is that of a CC he started to buy the shares of associated cement company and within the span of a few months he managed to increase the price from 200 rupees to nine thousand rupees more so he was able to convince people behind this massive hike in the share price the reason he gave was the concept of replacement of cost theory Harsha kept on heavily investing the money taken from the bank into the stock market that eventually resulted in a sharp rise in share prices the fast-moving stock market attracted more people to invest further pushing the stock prices he would wait patiently and as the stock market rose to a peak point he would sell his shares the sweeping a good profit if you think that her shot stopped right there you're wrong once he gained a good amount of money from the stock market he would go back to the bank's pay their money to take back his fake receipts this continued and he pulled off a complicated fraud the story continued until the share prices were increasing continuously but we are well aware that bull and there are two basic fundamentals of the stock market the bull trend did not continue for a long time and the bearish trend took over the stock market died back at the same rate it reached its peak resulting in the massive fall of the stock prices her shot suffered a loss ultimately unable to pay the bank's tech money skip to 23rd April 1992 a journalist by the name of so chatted allall from The Times of India wrote an article about the stunt pulled by Harshad Mehta exposing him to the world she was a blessing in disguise due to the entire game of faith received the Indian market system had to bear of whopping loss of rupees 3,000 to 4,000 Thurman's 1992 is also remembered for a massive stock market crash that resulted after the scamp in the stock market crash a number of investors had to bear a huge loss after the Harshad Mehta scam was put under light the then chairman of Vidya Bank committed suicide as he issued checks and the Hersh name the banks realized how smartly they must have been corned and started to ask their money from her shell he failed to do so because he himself had suffered a great loss in the bearish trend before the scan was exposed no one was aware of the entire fuss and the trick used by her sure falling this exposure he was arrested by CBI online to the member 1992 he was accused of six hundred civil action suits and around 70 criminal cases say we banned him from investing in the stock market forever while he was serving the term in tamii jail on 31st December 2001 he complained of heartache after which he was taken to Thani civil hospital finally at 12:30 a.m. he passed away looking at such a complex shrewd scam orchestrated by him he was named as the big bull of the stock market he was given this name because it's believed that the 1991 bull run initiated his fraud with all the mount aeneas money he made from the scam her shed what is he facing bunglow in Mumbai and was the owner of luxury cars like Lexus and starlet during that time he became one of the highest tax paying individuals by paying advance tax of 26 crores sadly his good deeds got faded because of the fraud he pulled off to