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HARSHAD MEHTA - SCAM

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Rashmi Jodha

on 19 August 2016

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Transcript of HARSHAD MEHTA - SCAM

THE BIG BULL SCAM

BIG BULL SCAM - HARSHAD MEHTA
Modus Operandi
Regulatory actions taken against Mehta
INSTRUMENTS USED IN SCAM
IMPACT OF THE SCAM
Exposure of 1992 securities scam
On April 23, 1992, journalist Sucheta Dalal exposed Mehta's scam.
Conclusion
Harshad Mehta
Name: Harshad Shantilal Mehta.

Born: 29 July 1953.

Died: 31 December 2001.

Profession: Stockbroker.

He earned degree in Bachelor of Commerce.

Started his working life as an employee of the New India Assurance Company.
Economic & Market position before the scam
Licensing system.

No permission for L.P.G.

Government intervention in business.

No permission for FII’s & FDI’s.

No specific act was passed by the parliament.

Open-Outcry system.

No Circuit Breakers.
READY FORWARD DEAL
A secured short-term loan from one bank to another.

Bank lends against government securities.

Broker brings together two banks for commission.

Securities and payments were delivered through the broker.



The process of RF
1) Settlement Process

2) Payment of cheques

3) Dispensing of securities

BANK RECEIPTS : FUNCTIONS

1) Confirms the sale of securities.

2) States the securities are held by the seller.

3) Acts as a receipt for the received money by
the selling bank.

In this scam Bank of Karad & Metropolitan
Co-operative Bank had issued fake BR.

Impact on Indian Economy
Government faced alot of criticized

Liberalization policies were criticized

All the shares bought by the accused brokers became "tainted" shares

Staggering losses for the lakhs of innocent investors
Response of the Government
Immense pressure on government from media and opposition to take concrete steps

Case was handed over to CBI and JPC

Government banned RF deal

All transactions done by the accused after 31 Mar 1991 were considered void
Based on Jim Harvey's speech structures
Impact on Others
Mehta had by then swindled the banks of a staggering Rs. 4000 crore

Bribery case on P. V. Narsimha Rao

Holding banks of the fake BR had to face losses

M. J. Pherwani of UTI died in the scandel

V. Mahadevan one of the M.D of SBI was removed from his office.

He was later charged with 72 criminal offences and 600 civil offences.

He was arrested and banished from the stock market

Mehta and his brothers were arrested by the CBI on November 9, 1992
Full transcript