Harshad Mehta

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

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