Harshad Mehta: The Big Bull Who Bullied The Indian Stock Market


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Harshad Mehta is one of the most (in)famous names in the history of Indian finance. Harshad Mehta managed to pull off the biggest scam in the history of the Indian stock market. He manipulated prices, achieved enormous success, and then brought down the economy of the entire country. In this post, we will find out about how it all went down. 

Here’s How Harshad Mehta Rattled The Indian Stock Market:

Who is Harshad Mehta?

Mumbai-based stock broker Harshad Mehta rose to fame in the early 1990s. In 1992, he was accused of a securities scam worth 40 billion rupees, which, taking into account inflation, corresponds to today’s 200 billion rupees ($2.45 billion). The scandal ended the career of the Big Bull of the Indian stock market, but his story became the basis of the plot of the TV series Scam 1992: The Harshad Mehta Story (2020).

How did Harshad Mehta grow up?

Harshad Mehta spent his childhood in the suburbs of Mumbai, where his father ran a textile business. As a teenager, Harshad enjoyed playing cricket, but when his father’s problems began, the young man had to start a textile business himself to support his family. Sometimes he was forced to work as an insurance clerk, sell cement, and sort diamonds. Mehta’s life changed when he joined the stock exchange in the 1980s when he became a speculator and developed connections in the banking industry. He subsequently founded his brokerage firm called Grow More Research and Asset Management.

How did Harshad Mehta carry out his scam?

Between April 1991 and 1992, India’s BSE Sensex rose from just over 1,000 points to nearly 4,500 points as Harshad Mehta funneled billions of rupees from banks into the stock market. In the first three months of 1992, the Bombay market index soared by 126%, before collapsing by more than 20% in April.

Harshad Mehta manipulated the shares by using fake bank receipts to obtain money from several banks, including big ones like the State Bank of India (SBI) and the National Housing Bank (NHB).

Mehta established strong connections in the banking industry in the 1980s thanks to a loophole in the country’s banking system. Although the Reserve Bank of India (RBI) had directed banks to deal directly with each other in securities transactions, they preferred to rely on brokers. At the same time, “ready-forward deals” (RFD) were used by many banks to increase the value of their assets—government bonds.

What is an RFD?

RFDs were secured short-term 15-day loans provided by one bank to another against the security of government securities. The borrower bank assumed the obligation to sell the securities to the creditor bank and buy them back at the end of the term at a higher price, but the lenders did not receive real securities from the borrowers, and bank receipts.

Harshad Mehta acted as an intermediary for many banks who wanted to deal in government securities. He approached banks as a broker and then used fake bank receipts to obtain money from other banks to invest in the stock market. Banks lent him money because they believed the receipts were backed by government securities.

How was Harshad Mehta’s scam exposed?

The actions of Harshad Mehta were revealed by Indian journalist Sucheta Dalal. After the publication of the investigation, investors lost faith in him. Several investigative agencies, including India’s Central Bureau of Investigation (CBI), had begun probing his activities.

What claims did Harshad Mehta make?

Harshad and his brother Ashwin Mehta were kept in jail for three months, after which Harshad Mehta made several sensational statements. One of them was that he received support from influential people in the government, including through bribes. He even claimed that he paid 10 million rupees to the then Prime Minister of India Narasimha Rao, but such claims were never proven.

How did Harshad Mehta die?

In 2001, Harshad was again accused and convicted of misappropriating nearly 2.5 billion rupees and remained in custody until his death later that year. In total, he and his family members were charged in 76 criminal cases and more than 600 civil lawsuits. Soon after Mehta died of a heart attack in Tihar jail, all criminal cases against him were dropped, but a significant number of civil cases to recover debts from the family remained in force.

Who is Harshad Mehta’s wife and what is she doing now?

In 2022, broker widow Jyoti Mehta launched the site on behalf of her late husband. She spoke out about the legal harassment her family suffered for 30 years – even after Harshad’s death and with more than 1,200 court cases won. Jyoti points out that the rise in the stock index caused by Mehta’s manipulations, as well as the confidence he instilled in the media and other players, helped increase the value of shares of Indian companies and contributed to the prosperity of the domestic market.

“Harshad brought so many investors into the market by unlocking its potential, but all the good work he did was undone by Sucheta Dalal, who drove investors out of the market by creating a false panic. It must be recognized that the country needs capital for rapid growth, it can be provided in abundance by domestic investors themselves, in whose hands wealth should be created, and not by foreign investors reaping huge profits,” said Jyoti Mehta.

She claimed that her husband’s activities were based on market research and were not manipulation: “Harshad did not rig prices and the market was not a bubble as falsely claimed by Ms. Sucheta Dalal, the Reserve Bank of India and others.”

“Harshad did not commit any crime and did not harm small investors, the real loss was caused to them only by Sucheta Dalal, who sought to impose her views on the market by creating panic and driving down prices through a self-fulfilling prophecy,” said Harshad Mehta’s wife.

What is Scam 1992: The Harshad Mehta Story based on?

This story of the hit Sony LIV show is based on true events from the 1980s and 1990s. The biographical series is about an enterprising stockbroker, Harshad Mehta. In search of big money and success, he comes up with fraudulent schemes and pulls off the biggest scam in the history of the Indian stock market.

An unknown man enters the office of the Indian newspaper The Times of India. He introduces himself as an employee of Harshad’s company and wants to report his employer’s illegal activities. The stranger is sent to journalist Sucheta Dalal, who is investigating the case of Harshad Mehta’s fraud. According to the description of the series, it is clear that Sucheta Dalal will be able to bring Harshad to light. But the most interesting thing is to watch exactly how she does it. The series is based on Sucheta Dalal’s book The Scam: Who Won, Who Lost, Who Got Away. 


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