Harshad Mehta
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Harshad Mehta was a prominent Indian stockbroker in the 1990s who orchestrated one of the largest securities scams in Indian financial history. He exploited loopholes in the banking system to conduct fraudulent transactions called "ready forward deals" and use of "bank receipts", generating fictitious profits of Rs. 50 billion. When the scam was exposed, it led to a crash in the stock market and the failure of several financial institutions. Mehta was arrested and banned from the stock market. He died in prison from a heart attack while facing over 600 lawsuits related to the scam.
Harshad Mehta
- 1. HARSHAD MEHTA SCAM Presented by : - Nidhi Jani - Amoolya Submitted To : RVM Finishing School www.rvmfinishingschool.com +91-9550812083
- 2. INTRODUCTION Name: Harshad Shantilal Mehta Birth Date : 29th July,1953 Profession : Stockbroker He earned degree in Bachelor of Commerce Starting his working life as an employee of the New India Assurance Company
- 3. Harshad Mehta was one such broker who then acts as the middleman between two banks. He had knowledge of all loopholes of the banks By 1990,he became a prominent name in Indian stock market He took price of Associated Cement Company(ACC) from 200 to 9000.That’s an increase of 4400%!!!!!
- 4. INSTRUMENTS 2 instruments were mainly used in this scam: 1) RFD-Ready Forward Deal 2) BR-Bank Receipts
- 5. READY FORWARD DEAL A secured short-term loan from one bank to another Bank lends against govt securities A broker usually brings together two banks for which he is paid commission The securities & payments were delivered through the broker in the settlement process In such settlement the banks may not know with whom they are dealing
- 6. BANK RECEIPTS The borrower i.e. the seller of securities ,gave the buyer of the securities a Bank Receipt Bank Receipt serves 3 functions 1)Confirms the sale of securities 2)States that the securities are held by seller in trust for the buyer 3)Acts as a receipt for the received money by the selling bank
- 7. IMPACT ON OTHERS Holding banks of fake BR had to face losses As the scam was exposed,BR value became almost zero BR was removed by RBI The chairman of Vijya bank committed sucide Due to crash of some financial institutes many suicidal notes were found near body of Indian stock traders
- 9. REGULATORY ACTIONS TAKEN He was charged with 72 criminal offenses and more than 600 civil action suits were filed against him He was arrested & banished from the stock market
- 10. THE END OF BULL STORY….. He died in Thane prison due to heart attack He was a brave stock broker. He knew the loopholes in banking system as well as how to exploit that loopholes His whole intention to do this was to raise in SENSEX Forever remembered as the architect of RS.50 billion scam