Page 47 - Seniors Today Dec 2019

financial shock.
Harshad Mehta (Photo: Fotocorp)
Lajpatrai College, he had spent around
eight years trying his hand at various odd
jobs, including selling hosiery, cement and
insurance products, before stepping into
the stock market with a bang.
When the scam was exposed in 1992,
several banks were left holding fake Bank
Receipts (BRs) worth around Rs 4,000
crore issued by Harshad. He made use of
two small and little known banks – the
Bank of Karad (BOK) and the Metropolitan
Co-operative Bank (MCB), which willingly
issued BRs as and when required, for
a fee. BR was nothing but a symbol of
confirmation that the selling bank has got
the money while the buying bank has got
the securities. He took the money from
banks in return to these fake receipts issued
by colluding with bank employees. Banks,
which gave money to Harshad, assuming
that they were lending against government
securities, didn’t know what was in store
for them. As per the court case, Harshad
used these funds to drive up stock prices in
the market. His modus operandi involved
selling shares for a profit and retiring the
BR when it was time for him to return the
money. As soon as the scam was exposed,
several blue-chip stocks collapsed, pushing
thousands of investors and brokers into a
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To ensure speedy trial in an unending
flood of legal cases (at least 72 criminal
offences and more than 600 civil action
suits against Harshad alone), a Special
Court was instituted through a government
ordinance on June 6, 1992. Apart from
Harshad, the CBI also filed charges against
several bankers and high-flying brokers
such as AD Narottam, Bhupen Dalal, Hiten
Dalal and Naresh Aggarwal, among others.
The man who made colossal profits from
the stock market, running into hundreds of
crores of rupees, in a short span of time, and
made it to various magazine covers with
ease, turned a big fraudster overnight. His
fall from the grace was so quick, many stock
investors and brokers were driven to huge
financial losses and even suicides as the
scam hit the headlines.
The scam woke up the stock market
regulator and the government from a deep
slumber. Over the next two decades, they
brought in a series of regulations to prevent
reoccurrence of such stock meltdowns and
erosion in public’s confidence, and provide
security to millions of stock investors
flocking to the market. Nevertheless,
stockmarket scams in various hues and
magnitude have continued unabated.
Interestingly, there is no scamster in India
who would have inspired Bollywood
like Harshad. Nearly 27 years after the
scam was unearthed, Ajay Devgn has
just announced shooting of an Abhishek
Bachchan-starrer `The Big Bull’, loosely
based on Harshad’s life, a couple of months
ago.
In 2006, another Hindi film, Gafla, made
news by winning several international film
awards. Directed by Sameer Hanchate. It
was clearly inspired by the Securities Scam
and Harshad himself. Another Bollywood
movie, Aankhein in 1993, made interesting
reference to the mega scam too.
Harshad Mehta will continue to haunt the
stock market and its stakeholders for many
years to come.
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