Harshad Mehta, a prominent stock broker, orchestrated a massive securities scam in 1992 by manipulating the stock market through fraudulent bank receipts, borrowing almost Rs 4000 crores. His actions led to 72 criminal charges and approximately 600 civil actions after the scam was exposed by journalist Sucheta Dalal, revealing the unethical practices that inflated stock prices. The aftermath saw significant impacts on various banks and the loss of public trust, culminating in Mehta's arrest and eventual death in 2001.

1. HARSHAD MEHTA’S SECURITY’S SCAM (1992)

2. INTRODUCTION
• Harshad Mehta was a well known stock broker who
manipulated the stock market in 1992.
• He did so by borrowing funds from bank with worthless
bank receipts.
• The total amount borrowed was nearly Rs 4000 crores.
• He got this amount by issuing fake receipts which was later
recognised by banks.
• The cases filled against him were 72 criminal offence and
600 civil actions.
• He died on 31st December 2001.

3. EARLY LIFE
• He was born in 1954 and grew up in Raipur
• He completed his B.com from Lajpat Rai Colleage
and did odd jobs.
• He worked in New India Assurance Company.
• He soon developed interest in stock market and
wanted to join it.
• In 1981 he joined a Brokreage Firm.

4. HIS LEADING NAME IN STOCK
MARKET
• Since 1981 he worked under J.L Shah and Nandalal Sheth.
• When he gained experience he came up with a new project
along with his brother.
• His project was Grow more research and asset
management company.
• As his company was very some how he received funds
from J.L Shah and Nandalal Sheth.
• By this he started rising in the market.

5. INCEPTION OF THE
SECURITIES SCAM
• Harshad Mehta started buying shares heavily in the market
and was soon known as the “Big Bull”.
• But the problem started here was he was only buying the
shares of Associated Cement Company (ACC).
• The share’s value started rising from Rs.200 to Rs.
9000(approx).
• According to the SEBI norms this was the rise of 4400% on
the value of the shares.
• Some how he managed to convince the people that this
was due to the high level of bidding.

6. HOW DID HE ARRANGED
FUNDS FOR THIS BIDS?
• He used the flaws in the rules of SEBI to execute his plan.
• Harshad Mehta also acted as broker between banks.
• Collateralized banks receipts were used which were not actually
collateralized.
• These receipts were used for Bank to Bank lending.
• So he took the money from banks by issuing them fake receipts.
• He did these with many banks and arranged a large amount of funds.
• He used to instruments to acquire funds:-
• Ready Forward Deal
• Bank Receipts

7. BANK
RECEIPTS
• In a RF deal securities were not moved back and forth in
actuality.
• The borrower, i.e. the seller of securities, gave the buyer of
the securities a Bank Receipt.
• Bank receipts serve three functions.
1) Confirms the sale of securities
2) States that the securities are held by the seller in
trust for the buyer.
3) Acts as a receipt for the received money by the selling bank.
• In this scam Bank of Karad & Metropolitan Cooperative Bank
had issued fake BR.

8. READY
FORWARD
DEAL
• A secured short-term (typically 15-day) loan from one
bank to another.
• Bank lends against government securities.
• A broker usually brings together two banks for which
he is paid a commission.
• The securities and payments were delivered through
the broker in the settlement process.
• In such settlement the banks may not know with
whom they are dealing.

9. UNDERTAKING THE TRANSACTION
ON BEHALF OF THE BANKS.
• He acted smart and did not let buyer and seller to
know each other.
• This was properly done by the brokers as they
were the market makers.
• He located to banks BOK and MCB these to banks
were ready to counterfeit bank receipts without
any government securities.
• Using this Fake bank receipts he was borrowing
from other bank as they thought that they were
lending against government securities.
• This money was used in stock market and then
stocks were sold on profit and money was
returned when the BR retired.

10. INVESTIGASATION THE SCAM
• This scam was exposed by Sucheta Dalal in Times of Indian.
• It was clearly explained how the scam took place with the
help of Ready forward deal and how fake Bank Receipts
were used.
• In this case banks did not know about the other banks.
• Both money and securities were transfered through broker
in this case.
• By this he used this receipts to borrow from other banks
and kept on doing this.
• When the BR retired he borrowed from other banks this
cycle kept on going.

11. IMPACT OF THIS SCAM
• The techniques used by Harshad Mehta was unethical which
caused a huge increase in stock prises.
• Many banks realised that they were holding fake BR for which
they have lended money.
• The total amount of fake BR amounted to Rs. 4000 crores.
• The chairman of Vijay Bank committed suicide as he had given
a lot of cheques to Mehta which belonged to the public
holdings.
• Arrest warrant was issued against him for misappropriating
2.8 Million shares of about 90 companies.
• He was arrersted on 9th November 1992.
• BR was removed by RBI.

12. THANK YOU
MADE BY:- ARYAN AGRAWAL
Stock Market is all about speculation some of the case are disclosed and called
as big scams and some not disclosed.