Scribd Logo
Upload

Welcome to Scribd!

    • 16K views

    Presentation On Harshad Mehta Scam

    Uploaded by

    Hardik Kumar
    The document summarizes the Harshad Mehta securities scam that occurred in 1992 in India. It provides details about who Harshad Mehta was, how he started his career in stock broking, and how he exploited loopholes in the banking system to divert funds and issue fake bank receipts in order to manipulate the stock market and profit enormously. The scam had major impacts, including losses for banks, a fall in the stock market index, and delays to companies' capital raising plans. Mehta was ultimately arrested and charged with multiple criminal offenses relating to the scam.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Presentation On Harshad Mehta Scam

    Uploaded by

    Hardik Kumar
    16K views14 pages
    The document summarizes the Harshad Mehta securities scam that occurred in 1992 in India. It provides details about who Harshad Mehta was, how he started his career in stock broking, and how he exploited loopholes in the banking system to divert funds and issue fake bank receipts in order to manipulate the stock market and profit enormously. The scam had major impacts, including losses for banks, a fall in the stock market index, and delays to companies' capital raising plans. Mehta was ultimately arrested and charged with multiple criminal offenses relating to the scam.

    Original Description:

    Harshad Mehta Fraud

    Original Title

    Presentation on Harshad Mehta Scam

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document summarizes the Harshad Mehta securities scam that occurred in 1992 in India. It provides details about who Harshad Mehta was, how he started his career in stock broking, and how he exploited loopholes in the banking system to divert funds and issue fake bank receipts in order to manipulate the stock market and profit enormously. The scam had major impacts, including losses for banks, a fall in the stock market index, and delays to companies' capital raising plans. Mehta was ultimately arrested and charged with multiple criminal offenses relating to the scam.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    16K views14 pages

    Presentation On Harshad Mehta Scam

    Uploaded by

    Hardik Kumar
    The document summarizes the Harshad Mehta securities scam that occurred in 1992 in India. It provides details about who Harshad Mehta was, how he started his career in stock broking, and how he exploited loopholes in the banking system to divert funds and issue fake bank receipts in order to manipulate the stock market and profit enormously. The scam had major impacts, including losses for banks, a fall in the stock market index, and delays to companies' capital raising plans. Mehta was ultimately arrested and charged with multiple criminal offenses relating to the scam.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    SUBMITTED TO: PROFESSOR L.K.

    SINGH SIR
    SUBMITTED BY: DEEPIKA TIWARI
    &
    PRACHI ARYA
     Introduction.
     Exposure of the scam.
     About scam.
     Regulatory actions taken
    against Mehta.
     Impact of scam in the market.
     Conclusion.
     Harshad Shantilal Mehta was born on 29 July
    1954, at Paneli Moti, Rajkot district, in a
    Gujarat Jain family. His early childhood was
    spent in Kandivili, Mumbai, where his father
    was a small businessman.
     He completed his B.com in 1976 from
    Lajpatrai College Mumbai and after
    graduation did jobs related to sales and
    sorting of diamonds.
     Mehta started his career as a sales person in
    New India Assurance Company Limited.
     During this time he became interested in the stock market
    and after a few years he resigned and joined a brokerage
    firm.
     In early 1980s he moved to a lower level clerical job at
    brokerage firm B.Ambalal & Sons where he worked as a
    jobber for the broker P. D. Shukla.
     In 1981he became a sub-broker for stock brokers J.L. Shah
    and Nandlal Sheth.
     Became the member of BSE in the year 1984 as a broker.
     He took advantages of loopholes in banking system.
     He triggered SENSEX in 1992 and made the scam by diverting
    funds of rupees 4,000 crore.
     By 1990 he had risen to a position of prominence in the
    Indian securities industry, with the media touting him as
    “THE AMITABH BACHCHAN OF THE STOCK MARKET”.
     On April23, 1992, journalist Sucheta Dalal
    exposed Mehta’s scam.
     A columnist in Times of India.
     The scam can be categorized as Capital
    Market Scam in which it is done by
    manipulating the facts in order to attain
    enormous profits.
     There are three different aspects of the
    scam:
     Diversion of funds
     Use of (RF) ready forward deal to maintain
    (SLR) statutory liquid ratio
     Fake bank receipt
     A secured short-term (typically 15-day)
    loan from one bank to another.
     Bank lends against government securities.
     A broker usually brings together two banks
    for which he is paid a commission.
     The securities and payments were delivered
    through the broker in he settlement
    process.
     In such settlements banks may not know
    with whom they are dealing.
     In a RF deal securities were not moved back and
    forth in actuality.
     The borrower, i.e.; the seller of securities, gave
    the buyer of securities a bank receipt.
     The bank receipts serve three functions
    1. Confirms the buyer the sale of securities.
    2. States that the securities are held by the seller in trust
    for the buyer.
    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 bank receipts.
    .
    ISSUE OF FAKE
    B.R

    BROKER
    HARSHAD LENDERS
    BORROWERS
    MEHTA BANK
    BANK

    FUNDS
     Harshad Mehta was arrested by C.B.I on 09
    November 1992 and SEBI Had banned him
    to invest in stock market.
     Later he was charged with 72 criminal
    offenses. And more the 600 civil actions
    has filled against him
     The arrest warrant was issues based on
    grounds on misappropriating more than 2.8
    million shares of about 90 countries
    including ACC and Hindalco.
     The holding banks of fake BR had to face losses.
     The chairman of Vijaya Bank committed imitated
    suicide.
     BR is removed by the RBI.
     The Sensex fell from 4500 to 2500 loosing 100,000
    Crore in market capitalization.
     Inability of Indian companies to raise capital in world
    markets.
     The euro- issues planned by many Indian company
    were delayed.
     SEBI, the securities market regulator, postponed of
    private sector mutual funds.
     Harshad Mehta was a brave stock broker. He
    knows the loopholes in banking system as
    well as to have to exploit to loopholes.
     His whole intention is to raise the SENSEX.
    Thank You!

    You might also like