1. HARSHAD MEHTA
SCAM
Presented by :
- Nidhi Jani
- Amoolya
Submitted To : RVM Finishing School
www.rvmfinishingschool.com
+91-9550812083
2. INTRODUCTION
Name: Harshad Shantilal Mehta
Birth Date : 29th July,1953
Profession : Stockbroker
He earned degree in Bachelor of Commerce
Starting his working life as an employee of
the New India Assurance Company
3. Harshad Mehta was one such broker who
then acts as the middleman between two
banks.
He had knowledge of all loopholes of the
banks
By 1990,he became a prominent name in
Indian stock market
He took price of Associated Cement
Company(ACC) from 200 to 9000.That’s an
increase of 4400%!!!!!
4. INSTRUMENTS
2 instruments were mainly used in this
scam:
1) RFD-Ready Forward Deal
2) BR-Bank Receipts
5. READY FORWARD DEAL
A secured short-term loan from one bank to
another
Bank lends against govt securities
A broker usually brings together two banks for
which he is paid commission
The securities & payments were delivered
through the broker in the settlement process
In such settlement the banks may not know with
whom they are dealing
6. BANK RECEIPTS
The borrower i.e. the seller of securities
,gave the buyer of the securities a Bank
Receipt
Bank Receipt serves 3 functions
1)Confirms the sale of securities
2)States that the securities are held by
seller in trust for the buyer
3)Acts as a receipt for the received money
by the selling bank
7. IMPACT ON OTHERS
Holding banks of fake BR had to face
losses
As the scam was exposed,BR value
became almost zero
BR was removed by RBI
The chairman of Vijya bank committed
sucide
Due to crash of some financial institutes
many suicidal notes were found near body
of Indian stock traders
8.
9. REGULATORY ACTIONS
TAKEN
He was charged with 72 criminal
offenses and more than 600 civil action
suits were filed against him
He was arrested & banished from the
stock market
10. THE END OF BULL
STORY…..
He died in Thane prison due to heart attack
He was a brave stock broker. He knew the
loopholes in banking system as well as
how to exploit that loopholes
His whole intention to do this was to raise
in SENSEX
Forever remembered as the architect of
RS.50 billion scam