Harshad Mehta Scam (1992) – The Biggest Stock Market Fraud in India
Harshad Mehta Scam (1992) – The Biggest Stock Market Fraud in India
%20%E2%80%93%20The%20Biggest%20Stock%20Market%20Fraud%20in%20India.jpeg "Harshad Mehta Scam (1992) – The Biggest Stock Market Fraud in India")
Harshad Mehta Scam (1992) – The Biggest Stock Market Fraud in India
Harshad Mehta Scam (1992) – The Biggest Stock Market Fraud in India
Who was Harshad Mehta?
* A stockbroker known as the “Big Bull” for driving a massive stock market rally.
* Used loopholes in the banking system to manipulate stock prices.
How the Scam Worked?
* Mehta took advantage of the bank’s lack of direct investment in the stock market.
* Used fake bank receipts (BRs) to borrow money from banks.
* Significant capital injections into stocks including ACC drove prices higher
* Example ACC Stock increased from ₹200 to ₹9,000).
* Created a stock market bubble by artificially inflating prices.
The Exposure of the Scam!
* April 1992 – Journalist Sucheta Dalal exposed the fraud in The Times of India.
* ₹3,500 crore scam shook the Indian financial system.
* Led to a major stock market crash – Sensex plunged over 50% from its peak.
Impact on Market & Economy
* Sensex Crash – Fell from 4,467 to 2,529 in months.
* Banks suffered huge losses, many collapsed.
* SEBI strengthened stock market regulations.
* Led to the introduction of electronic trading & depository system.
Final Fate of Harshad Mehta
* Arrested in 1992, released on bail but faced multiple cases.
* Died in 2001 in prison due to a heart attack.
Lessons from the Scam!
* Always be aware of market manipulations.
* Regulations are crucial to protect investors.
* Investing based on speculation can be risky!
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