Harshad Mehta’s wife Jyoti Mehta has launched a website aiming to explain her late husband’s side of the story and give a slice of life of the people he left behind. The 1992 Securities Scam was a Rs 4,000 crore scam and remains one of the worst frauds committed on the Indian stock market to date.
Who was Harshad Mehta?
Harshad Mehta was born on July 29, 1954, to a traditional cloth merchant Shantilal Mehta and mother Rasilaben Mehta at Ghatkopar, Mumbai. He did his initial schooling at Ghatkopar and then at Rose Manor Garden School at Santacruz, Mumbai. Mehta completed his B.Com in 1976 from Lala Lajpatrai College, Mumbai. While studying in college, Harshad tried his hands at several menial jobs with little success such as supplying cement, getting diamonds polished every weekend by traveling to Surat, and working in a relative’s hosiery store.
In 1976, Harshad joined New India Assurance Company Limited (NIACL) in their head office at Fort in the Hull Department. During this time, he got interested in the stock market and after a few days, he resigned from his job at New India Assurance and started a full-time career in BSE. He worked as a jobber for the broker Prasann Prajivandas Broker who he considered his “Guru”.
Harshad got married to Jyoti Mehta on May 17, 1977. They were blessed with son Aatur in 1982.
In 1982, Harshad with his younger brother, Ashwani set up a small partnership firm Growmore Investments and started from a gallery of about 50 square feet. Over a period of ten years, beginning in 1980, he had risen to a position of prominence in the Indian securities industry.
Harshad was often referred to as the ‘Big Bull’ of Dalal Street or the ‘Amitabh Bachchan’ of the Indian stock market – a tag that he earned due to his flamboyant lifestyle after becoming a celebrity status stockbroker.
Securities Scam 1992
In 1992, he was charged with the securities scam, bringing an end to his bull run. According to many financial journalists who covered the scam, Harshad successfully managed to manipulate stocks by illegally obtaining money from several banks using fake bank receipts, He created a vicious cycle of fraud involving big names such as the State Bank of India (SBI) and the National Housing Bank (NHB).
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The securities scam of 1992 worth around Rs 4,000 crore, way over Rs 20,000 crore when adjusted for inflation in today’s date, lead to transformational changes in the stock market. Stricter laws were introduced to widen the regulatory powers of the Securities and Exchange Board of India (SEBI). The stock market saw extensive changes like the reduction of the settlement cycle, minimum balance, and online transactions among other measures.
This was just one part of the scam, Harshad has also taken advantage of loopholes in the country’s banking sector – some that exist even today.
Between 1991 and 1992, Sensex jumped from just over 1,000 points to almost 4,500 points. During this period, Harshad diverted thousands of crores obtained from banks into the stock market.
When the scam was exposed by veteran journalist Sucheta Dalal, it was revealed how Harshad Mehta had exploited gaps in the banking system to manipulate stocks. Soon after the scam was exposed, the stock market saw a bloodbath that deeply impacted Mehta’s holdings.
Harshad passed away on December 30, 2021, due to a heart attack. His life and his 1992 scam are covered in detail by Sucheta Dalal and Debashish Basu in their book “The Scam: From Harshad Mehta to Ketan Parekh”.