This article discussed the Harshad Mehta scandal in detail. It discusses how Harshad Mehta could pull off such a huge scandal and what the motivations of the. Hence after studying and doing the deep analysis, I have written the detailed case study in simple language about the Harshad Mehta scam, so that everyone . The Harshad Mehta case can only end in stages. Firstly, the I-T Department will have to re-assess its claims and come up with a figure that is.

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Mehta was arrested by investigation agencies in November Harshad Mehta was a well-known stock broker, alleged to have manipulated the stock market in by drawing out funds from banks fraudulently.

Exploiting several loopholes in the banking system, Mehta and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many segments, triggering a rise in the BSE SENSEX. Your Reason has been Reported to the admin. Mehta collected fake BRs from these banks and passed on to other banks which paid him money under assumption that they were lending against securities.

At that time, a bank had to go through a broker to buy securities and forward bonds from other banks. India had two very different but parallel markets in operation.

As the scam broke loose, the valuations in the Bombay Stock Exchange collapsed. In the interim, Ashwin Mehta managed to get a law.

A BR is also treated as a receipt for money received from the buyer of securities.

But Ashwin is not willing to buy this argument. All criminal cases against Harshad Mehta got disposed off a few years ago, but there are several civil cases awaiting final closure. A lesser known fact about the Indian stock market scam by Harshad Mehta is the involvement of Nimesh Shah who managed to keep a very low profile.

Periodically, the custodian files a confidential report valuing the property under its custody and liabilities to be paid off.

Ethics in Indian Businesses: Case Studies of Harshad Mehta, Ranbaxy, Satyam& Others

He was tried for 9 years, until he died in late Narsimha Rao as being a beneficiary from the corruption and threatened to reveal many more names. This will alert our moderators to take action Name Reason for reporting: The entire market was on the rise.


An RFD is a secured short term day-loan from one bank to another. The scheme was financed by supposedly collateralised bank receipts, which were in fact uncollateralised.

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The Harshad Mehta case: Where time has overtaken justice by a mile

Hence the name – bank receipt. As on Septemberthe banks were decreed by Court to get Rs 1, crore, out of which Rs 1, crore has already been paid on condition that sum or part of the sum would be returned if court ask them to do so. It is said, stocks like ACC surged from about Rs per share to about Rs apiece during this period. This will alert our moderators to take action. Products Campus Jobs Bank Jobs. One market was for corporate securities i. In the end, as he was to book profits, he sold the stocks on the day the market crashed.

In the new market established by Mr Mehta, the broker was more of a market maker. One reason could be the yarshad of Harshad Mehta 15 years ago.

We work hard harxhad generate true information and facts through detailed research and analysisyet one should adapt such information on his own responsibility. When the scheme was exposed, banks started demanding their money back, causing the collapse. It is when the banks wish to buy back stocks that the brokers come into the scenario. What to do when boss takes credit of your work? The valuers had very little means to link up benami accounts with Harshad Mehta.

Here, however, one cannot blame the custodian as Harshad Mehta held shares worth Rs crore across companies in benami accounts value as on Juneas mentioned in a court submission. One such broker in the Indian stock market was Harshad Mehta whose name has emerged in a scam. No less than Ram Jethmalani was engaged to beachhead the odd criminal cases lodged against the Mehta family.


Former custodian Satish Loomba says the case should be treated as one batch case and disposed off. What megta to the cases? He was charged with over 70 criminal cases mostly relating to bribery, cheating, forgery, criminal conspiracy and falsification of accounts and over civil action suits. The securities scam of refers to fo diversion of bank funds worth Rs crore to a clutch of stockbrokers – the kingpin being Bombay-based broker Harshad Mehta.

Indian Stock Market Scam by Harshad Mehta: Implications – Case Study

This page was last edited on 15 Decemberat In this settlement process, the buyer and the seller might not even know whom they had xtudy with, either being known only to the broker. Partly, this caused the market Sensex to surge to over points.

This meant that both the banks were dealing with the broker and neither knew who the counterparty was. In the early s, he moved to a lower level clerical job at the brokerage firm Harjivandas Nemidas Securities where he worked a jobber for the broker Harshac Pranjivandas Broker who he considered his “Guru”.

The Harshad Mehta Scam in India ()

Debashis Basu’s ‘The Scam: He was arrested and banished from the stock market with investors holding him responsible for causing a loss to various entities. Since he had to book profits in the stucy, the day he sold was the day when the markets crashed. In the initial years of the case, Harshad and his brothers — inured to expensive cars and swanky apartment blocks — hired the most expensive lawyers in the country. The money due to the bank was returned.

Retrieved 21 May But that does not augur well for cases pertaining to economic offences and scams, which have wider repercussions.