Harshad Mehta Scam 1992 | Key Points
The Harshad Mehta scam of 1992 was a major stock market manipulation scheme in India. Harshad Mehta, a stockbroker, exploited loopholes in the banking system to siphon off funds from banks and funnel them into the stock market.
This artificially inflated stock prices, creating a bull run. When the scam was exposed, the stock market crashed, causing widespread losses for investors.
Key Points About the Scam:
• Market Manipulation: Mehta and his associates used various techniques to manipulate stock prices, including circular trading, creating artificial demand, and spreading rumors.
• Banking System Loopholes: They exploited loopholes in the banking system, particularly in the “ready forward” (RF) transactions, to secure funds illegally.
• Media Exposure: The scam was exposed by journalist Sucheta Dalal in April 1992, leading to investigations and Mehta’s arrest.
• Impact: The scam caused a major stock market crash, eroding investor confidence and exposing weaknesses in the Indian financial system.
• Legal Proceedings: Mehta faced numerous charges but was convicted of only four before his death in 2001.
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The scam’s impact led to significant reforms in the Indian stock market, including:
- Improved regulations: Stronger regulations and surveillance systems were put in place to prevent similar scams.
- Settlement systems: Changes were made to the clearing and settlement systems to reduce risks.
- Investor protection: Measures were introduced to enhance investor protection and awareness.
The Harshad Mehta scam remains a landmark event in Indian financial history, serving as a reminder of the importance of market integrity and investor protection.
If you’d like to delve deeper into the Harshad Mehta scam, I recommend checking out these resources:
- Scam 1992: The Harshad Mehta Story: A popular web series on SonyLIV that dramatizes the events of the scam.
- Books and articles: Several books and articles have been written about the scam, offering detailed analyses and insights.
- ** documentaries:** Documentaries like “The Scam” explore the scam and its implications.
