Now since Harshad Mehta was dealing with many banks at the same time he could then keep some capital with him at all times. For eg. He takes money from A on Monday,and tells B that he’ll pay on Tuesday, then he takes money from C on Tuesday and tells D that he’ll pay on Wednesday and the money he gets from C is paid to B and as a result he has some working capital with him at all times if this goes on with other banks throughout the week. The banks at that time were not allowed to invest in the equity markets. Harshad Mehta had very cleverly squeezed some capital out of the banking system. This capital he invested in the stock market and managed to stoke a massive boom.
Read Indian Stock Market Articles
He took the price of ACC from 200 to 9000.Thats an increase of 4400%!!!The market went up like crazy and the bulls were on a mad run. Since he had to book profits in the end, the day he sold was the day when the market crashed. The same day Vijaya Bank chairman committed suicide by jumping from the top of the banks’ office. The chairman knew that when it would become public that he had written cheques in the name of Mehta, he would be dead meat. One rather unknown fact about this scam is that there was a very important player in this scam who managed to keep a very low profile. That man was Nimesh Shah. He was just as involved as Harshad Mehta but he knew how keep out of the hands of the law. Nimesh Shah still deals in the stock market and is known to be a heavy player. Harshad Mehta is now dead. It is rumored that when he died, he still had 10% of ACC shares with him.
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{ 23 comments… read them below or add one }
It s so nice and help me to teach my students……………
very nicely written..simple and clear ..will never forget this thing for the rest of my life… but i have read in several places that he had siphoned off money from SBI rather SBI was in a big way involved in it .. cn u please make it clear ?
I dont think Mr Harshad Mehta done froud with any body if he use his mind and make profit then wt,s wrong where is govt. and Sebi that time, Govt is also responsible for that becouse govt had a loop point for invest in bonds and they cheqe it only weekend The banks at that time were not allowed to invest in the equity markets why now and banks are also responsible they want more return on public money. Mr Harshad Mehta gave retuen to bank 15% then where he was froud.
Mr Harshad Mehta was a gennius person he gave govt a new strategy to earn money from public and invest in share market and no gurrantee of retuen but Mehta gave return to bank 15%. But his fault is that he was more capble, clever, genius & better than Govt and SEBI
I dont know all history of Mr. Mehta but he had a great mind he done that which all person want to do high return with other money. He had done business without own money and made large profit, companies also do that public ka paisa or loss hua to insolvant verna profit in pocket money now all insitution do that which he done, LIC Aviva etc all these company collect
hi i
I would like to know how the Harshad Mehta Scam had an impact on the working of State Bank of India. Was SBI too writing cheques in the name of Harshad Mehta. I have heard that a MD of SBI was removed due to this scam. I need clarification on this issue which is not mentioned anywhere.
Hey very well explained. But add some more facts also.
Mehta also got fake bonds from a few banks and gave it to other banks. Since they are all fake Bonds, these banks were met with losses once the truth revealed and markets crashed..
Its very easy to understand about mehta scam.Really good article.
The article is in very simple language and easy to digest the contents. Mehta did not
committed the fraud after all he was paying 15% return to gready bankers.
Really a gr8 mind of Mr. Mehta…. This is called raw business
Harshad mehta simply sold and bought with a huge difference in prices which was made by him….people call it a scam coz it’s beyond their imagination , just that he was way head of his times…
That’s really a big buddy fraud…
awesome brains…
thanks>>> very well explaind///its really a great use of mind by late mr. mehta but i think it was bank which were the real reason of fraud..but the burden was shifted more on him .. buts its ok i mean to help some one in doing something wrong is equally bad//
Nicely written in easy language with excellant example of A & B…
really a good job done
Watch movie GAFLA to get another perspective on Harshad Mehta…its available on you tube.
Dis person ws a master mind… i got sy m imprd by dis story
This kind of scam is possible today also ….Few broker are doing …2 to 3 times in a month ……investor are called FII and Broker make a smart move ….for E.g 10 FIIs want to invest money in indian share market than they have to go with broker root …..all the broker had the same plan for one or 2 stock …only those stock they invest..e.g BF Utility, Jubiliant Food……Thinksoft ..SKS micro etc some of the stock ….they go for buyng or short the stock …style is different but the result is same ….
this helped me in understanding the scam very easily
Fluently written and very impressively explained.!
WATCH MOVIE GAFLA…AWESOME MOVIE OF THE GENIOUS MAN MR MEHTA…
harshad mehta was genius person and he is good business man but he done some illegal work that was wrong .
please tell who all ministers were involve in this Harshad Mehta stock scam..these days there is news that our present P.M.and Mr. chidambaram were involved some how to this scam.
government before geting some acts and regulations it should be aware of all the loops what i have seen in our government is that it is closing the loopholes after getting a great scams or from the mean where some people can claerly used the loopholes. wether it is of SEBI or SPECTREM SCAM or KALMADI or many scams still now when iam writing this mesagethere will be scams at any part f our country
i can see one more loophole is in the judiciary system of our country . rather than punishing the guilty in this type of cases it prolong the cases so that they can easily escape
if the person finds guilty in financial cases then all his assets should be taken contolle by the government