The document summarizes two major corporate scams in India: (i) The Satyam scam led by Ramalinga Raju in 2009, and (ii) The Harshad Mehta stock market scam in 1992. The Satyam scam involved falsifying accounts to inflate profits by over $1 billion. Raju used the inflated share prices to acquire real estate, until the fraud was revealed in 2009. The Harshad Mehta scam exploited loopholes in the "ready forward" system to illegally gain control of funds from various banks and manipulate stock prices. Both scams had major financial impacts and exposed flaws in the system.
The Harshad Mehta Scam Exposed. The entire mechanism and who were the key parties involved, the aftermath and the effects of the scam on the stock market and the overall Indian Economy. The ethical issues involved and the action taken to prevent any such scams in the future by the government.
The Harshad Mehta Scam Exposed. The entire mechanism and who were the key parties involved, the aftermath and the effects of the scam on the stock market and the overall Indian Economy. The ethical issues involved and the action taken to prevent any such scams in the future by the government.
A case study on how Harshad Mehta scammed the entire stock market. There are certain examples and history on how he played a role as a stockbroker.
The underlined and highlighted words can be googled to further more enhance your knowledge.
The scam can be categorized as capital market scam
in which it is done by manipulating the facts in order to attain enormous funds.
There are four different aspects of the scam.
Diversion of funds
Intra day trading
Use of ready forward to maintain SLR
Fake bank recipts
A study on Vijay Mallya Scam Case: Vijay Vittal Mallya, once known to you and me as ‘The King of Good Times’ or also dubbed ‘ The playboy of the East’ was born to the Indian Entrepreneur Vittal Mallya in 1955. Vittal Mallya was largely known for the role played as the director of United Breweries (UB) Group which he achieved at the age of 23. Following his father’s sudden demise Vijay Mallya became chairman of the UB Group.Vijay Mallya was always known for his flamboyant and posh lifestyle. A testament to these were the lavish New Year Parties at his Kingfisher Villa in Goa or the birthday bashes thrown on his luxurious Yacht ‘ The Indian Empress’.
WHAT IS INSIDER TRADING???
Insider trading is dealing in securities of a listed company by any person who has knowledge of material “inside” information which is not known to the general public.
WHO IS INSIDER???
Insider is the person who is “connected” with the company , who could have the unpublished price sensitive information or receive the information from somebody in the company.
CONNECTED PERSON WITH DETAILED CLARIFICATION
Any person who is or has been associated with company, in any manner, during the six months prior to the concerned act:
An immediate relative to the connected person.
A banker of the company.
An official of stock Exchange or of clearing corporation.
A holding/associate/subsidiary company.
WHAT INCLUDES TRADING ?
WHO ARE INSIDER TRADERS?
Corporate officers, directors ,and employees who traded the corporations securities after learning of significant, confidential corporate developments.
Friends, business associates, family members and employees of law, banking and brokerage firms who were given such information to provide services to the corporation whose securities they traded.
GOVERNING REGULATIONS
Securities & Exchange Board Of India Act,1992
SEBI (Insider Trading) Regulations,1992
SEBI (PIT) (Amendment) Regulations,2002
SEBI (PIT) (Amendment) Regulations,2003
SEBI (PIT) (Amendment) Regulations,2008
SEBI (PIT) (Amendment) Regulations,2011
HISTORY BEHIND INSIDER TRADING IN INDIA
Insider trading in India was unhindered in its 130 year old stock market till about 1970.
In 1979,the Sachar Committee recommended amendments to the companies Act,1956 to restrict prohibit the dealings of employees. Penalties were also suggested to prevent the insider trading.
In 1989 the Abid Hussain Committee recommended that the insider trading activities may be penalized by civil and criminal proceedings and also suggested the SEBI formulate the regulations and governing codes to prevent unfair dealings.
UNPUBLISHED PRICE SENSITIVE INFORMATION
REGULATORY ASPECTS OF PROHIBITION OF INSIDER TRADING
SEBI prohibition of Insider Trading regulation 1995.
Section 11(2) E of companies act 1956 prohibits the insider trading.
WHY THERE IS NEED FOR PROHIBITION OF INSIDER TRADING???
As per SEBI the Prohibition of Insider Trading is required to make securities market:
Fair and Transparent.
To have a Level Playing Field for all the participants in the market.
For free flow of information and avoid information asymmetry.
CASE STUDY
HLL – BBLIL MERGER CASE
HLL-BROOKBOND LIPTON INDIA LTD
The case primarily involves 4 pa
A case study on how Harshad Mehta scammed the entire stock market. There are certain examples and history on how he played a role as a stockbroker.
The underlined and highlighted words can be googled to further more enhance your knowledge.
The scam can be categorized as capital market scam
in which it is done by manipulating the facts in order to attain enormous funds.
There are four different aspects of the scam.
Diversion of funds
Intra day trading
Use of ready forward to maintain SLR
Fake bank recipts
A study on Vijay Mallya Scam Case: Vijay Vittal Mallya, once known to you and me as ‘The King of Good Times’ or also dubbed ‘ The playboy of the East’ was born to the Indian Entrepreneur Vittal Mallya in 1955. Vittal Mallya was largely known for the role played as the director of United Breweries (UB) Group which he achieved at the age of 23. Following his father’s sudden demise Vijay Mallya became chairman of the UB Group.Vijay Mallya was always known for his flamboyant and posh lifestyle. A testament to these were the lavish New Year Parties at his Kingfisher Villa in Goa or the birthday bashes thrown on his luxurious Yacht ‘ The Indian Empress’.
WHAT IS INSIDER TRADING???
Insider trading is dealing in securities of a listed company by any person who has knowledge of material “inside” information which is not known to the general public.
WHO IS INSIDER???
Insider is the person who is “connected” with the company , who could have the unpublished price sensitive information or receive the information from somebody in the company.
CONNECTED PERSON WITH DETAILED CLARIFICATION
Any person who is or has been associated with company, in any manner, during the six months prior to the concerned act:
An immediate relative to the connected person.
A banker of the company.
An official of stock Exchange or of clearing corporation.
A holding/associate/subsidiary company.
WHAT INCLUDES TRADING ?
WHO ARE INSIDER TRADERS?
Corporate officers, directors ,and employees who traded the corporations securities after learning of significant, confidential corporate developments.
Friends, business associates, family members and employees of law, banking and brokerage firms who were given such information to provide services to the corporation whose securities they traded.
GOVERNING REGULATIONS
Securities & Exchange Board Of India Act,1992
SEBI (Insider Trading) Regulations,1992
SEBI (PIT) (Amendment) Regulations,2002
SEBI (PIT) (Amendment) Regulations,2003
SEBI (PIT) (Amendment) Regulations,2008
SEBI (PIT) (Amendment) Regulations,2011
HISTORY BEHIND INSIDER TRADING IN INDIA
Insider trading in India was unhindered in its 130 year old stock market till about 1970.
In 1979,the Sachar Committee recommended amendments to the companies Act,1956 to restrict prohibit the dealings of employees. Penalties were also suggested to prevent the insider trading.
In 1989 the Abid Hussain Committee recommended that the insider trading activities may be penalized by civil and criminal proceedings and also suggested the SEBI formulate the regulations and governing codes to prevent unfair dealings.
UNPUBLISHED PRICE SENSITIVE INFORMATION
REGULATORY ASPECTS OF PROHIBITION OF INSIDER TRADING
SEBI prohibition of Insider Trading regulation 1995.
Section 11(2) E of companies act 1956 prohibits the insider trading.
WHY THERE IS NEED FOR PROHIBITION OF INSIDER TRADING???
As per SEBI the Prohibition of Insider Trading is required to make securities market:
Fair and Transparent.
To have a Level Playing Field for all the participants in the market.
For free flow of information and avoid information asymmetry.
CASE STUDY
HLL – BBLIL MERGER CASE
HLL-BROOKBOND LIPTON INDIA LTD
The case primarily involves 4 pa
Penny stocks are the stocks that are traded at a low price, usually under Rupees 50. These stocks have low market capitalization and are usually illiquid. These are the lesser-known stocks to the larger public out there. Usually, these are less preferred by investors due to the limited information about the fundamentals, and businesses are unreliable or unavailable. But the best penny stocks in India are popularly known for generating multi-bagger stock, i.e. returns within a few trade sessions.
Penny stocks are the stocks that are traded at a low price, usually under Rupees 50. These stocks have low market capitalization and are usually illiquid. These are the lesser-known stocks to the larger public out there.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
3. What was the Satyam scam?
Satyam Scam was the big corporate scam that occurred
in India in 2009.
It is also regarded as “Debacle of the Indian Financial
System”
The case of Satyam is often referred to as "India's
Enron"(Enron was a US based company which was
inflicted with a similar accounting fraud).
It was a 7,136 crore (nearly $1.5 billion) Fraud and it is
seen as India's Most Colossal Financial Fraud.
The fraud shows how disastrously investors can lose
money by simply misstating the figures in the Balance
Sheet.
Ironically, Satyam means “truth” in Sanskrit, but Raju’s
4. History of Satyam Computers
IT Company name Satyam Computers was
started by Ramalinga Raju and his brother in law
in 1987.
Raju was Harvard Graduate and an impressive
personality.
Satyam was Hyderabad based company.
In 1991-92 Satyam computers was listed on BSE
(Bombay Stock Exchange) and in 2001 it was
listed on NYSE (New York Stock Exchange).
Satyam Computers was one of the fastest
growing company of India and hence Satyam
Computers as well as Ramalinga Raju received
many awards during its growth years
5. How did Raju do this scam?
•During the same period the Real Estate was on Boom and hence Raju was
attracted towards real estate market. The property rates in Hyderabad was
growing rapidly so Raju aggressively started buying the land properties in
Hyderabad and nearby areas.
•Due to aggressive buying of properties Raju was in short of funds (money)
hence to generate more funds he started to manipulate the financial statements
of Satyam Computers.
•For example, If Satyam had the actual profit of Rs60 crores then in financial
statements Raju used to show the profit of Rs600 crores so as to show that
Satyam is growing very rapidly.
•Due to this fake rapid growth and fake strong financials the price of share of
Satyam was growing rapidly. Raju and his brother was selling the shares of
Satyam on this high price so as to raise the money to buy properties.
•Raju opened 365 new companies to buy the properties. He used to buy the
properties under the name of his family members, relatives, friends etc. Raju
used to make his farm workers (whose monthly income was not more than
Rs5000) the Directors of his newly opened companies and used to buy the
properties under their name
6. What was Raju’s plan
Raju plan was that the rates of the properties
will grow in multiples after some time, after that
he will sell those properties and from the
money earned, he will balanced the gap that
he has created in financial statements of
Satyam
7. •Because of manipulating the financial statements of Satyam as well as showing the
fake rapid growth for years, the price of share of Satyam was growing very rapidly.
•Taking advantage of this, the promoters of Satyam used to sell those shares on high
price to earn profit.
•In 1999 the promoters of Satyam hold 24% of shares, while in 2008 it was reduced to
2%.
•As the days were passing the gap between the actual figures and fake figures was
increasing resulting into a huge amount.
•Due to recession in 2008, the rates of properties decreased drastically and Raju’s plan
of selling properties at high rates failed.
•Raju was in great trouble and to escape from this he made a new plan. According to
this new plan, Satyam will buy the two companies that is Maytas properties and Maytas
Infra (both companies of Raju’s family members). They will buy the companies on paper
but in real there will be no cash transactions so as to balance the fake figures and actual
figures in accounts of Satyam.
•Satyam’s board of directors approved the plan 16th Dec 2008 and without taking the
permission of Share Holders, Raju sanctioned the deal.
•But investors of Satyam were not happy and due to this price of stock of Satyam
decreased.
•One investor from U.S filed Lawsuit on Satyam due to which the price of Satyam was
decreased by almost 55% on NYSE.
•Due to increasing pressure of investors on Raju, he cancelled the plan of buying
Maytas Infra and Maytas properties.
•This was last chance for Raju to fill the gap between actual and fake figures of Satyam
and stop this scam for revealing, but seeing it failed, on 7th Jan 2009 he confessed to
8. •After this scam, government appointed new Board of Directors on Satyam.
•In April 2009 Tech Mahindra purchased the 51% shares of Satyam Computers and
named it Mahindra Satyam.
•Finally in June 2013, Mahindra Satyam merged in Tech Mahindra.
•Before this scam was revealed, Satyam was recognized as 4th largest IT Company of
INDIA and usually tagged as “IT Crown Jewel of INDIA”. Satyam’s stocks were included
in Sensex and Nifty but were removed on 9th Jan 2009.
•After scam was revealed, Satyam’s stock decreased from Rs170 to Rs6.50 due to
which its investors suffered the loss of almost Rs14162 crores. LIC was institutional
investor in Satyam and suffered the huge loss of Rs950 crores.
•The meaning of word Satyam in Sanskrit is ‘Truth’. But there was no truth in operations
of Satyam. To earn the money Raju did many illegal activities like Money Laundering,
Insider Trading and Accounting fraud due to which many common investors of Satyam
suffered a lot.
9. What can we learn from this
scam?
There is one thing for us to learn from this
scam, that if promoters of any company are
selling their shares then always check why
they are doing so and mostly do not invest in
such companies.
10.
11. Introduction of Harshad Mehta
Harshad Mehta was an Indian Stock broker and was
known as the big bull of Dalal Street.
He was born on 29th of July 1954 in a poor family in
Rajkot District in Gujarat. His father was peon. He
migrated to Mumbai with just Rs40 in his pocket.
In 1976 he somehow managed to complete his
graduation in commerce from Lala Lajpat Rai College,
Mumbai.
After completing his graduation, he worked in some
companies for couple of years
While working as a sales person in New India Assurance
Company Ltd. he developed the interest in Share Market
and hence after quitting his job in early 1980’s, he joined
the Stock broker B.Ambalal.
12. Contd….
Later 1981 he worked as sub-broker to stock broker
J.L.Shah and Nandalal Sheth.
After gaining ample of experience, in 1984 he with his
brother, started his own firm named as Grow More
Research and Asset Management.
Later, he became the member of Bombay Stock
Exchange as a broker.
In 1986, He started trading actively.
By early 1990, he became a famous stock broker and a
number of eminent people began to invest in his firm,
and utilize his services including the then minister
P.Chidambaram.
13. Harshad Mehta mainly used two
instruments in scam:
1. Ready Forward Deal (RF Deal).
2. Bank Receipt (BR).
Harshad Mehta used technique of the RF Deal
or Ready Forward Deal in scam. Ready
Forward deal was the short term loan
instruments for bank. To know what RF deal
is first we will see what government securities
are
14. Government Securities:-
Basically Government Issue’s securities to cover its expenses of various
project. They are called as Government Securities. Bond is an example of
government securities. In bond, the government raises the fund to cover its
expenses, and in return, pay the interest to investors who have invested in
these bond. It was mandatory for all banks to invest in this government
securities in those days.
In 1990’s, if any bank was in short of funds (money) then to generate funds, it
used to sell its bond or securities to other bank and in return after some days
would pay some interest with capital to regain its bond.
Ready Forward deal:-
one bank would give the short-term loan to other bank and keep government
bonds of that bank as collateral.
In ready forward deal brokers used to work as mediators between two banks.
Brokers work was to find the buyers for banks, willing to sell their securities or
bonds and vice-versa find sellers for the banks which are ready to buy the
securities.
In such settlement bank may not know with whom they are dealing.
Harshad Mehta was the broker, and used to work as mediator between two
banks.
15. Loopholes in the system of RF
Deal
There were some loopholes in this system of RF Deal
using which the broker could make ample of illegal
money.
Harshad was very well known with this loopholes and
using this loopholes, he made the biggest scam in
history of stock market. We will see with an example
how he did it.
16. Example:
• there are four banks A, B, C, and D. Harshad worked as a broker between these
banks.
•If bank A wants to sell its securities to generate the fund, so it approached to Harshad
and ask to find a buyer. Harshad would take the bonds from bank A and ask the bank to
give him some time to find the buyer. In the same way if Bank B wants to buy the
securities then same like above Harshad would take the money from bank B and ask for
some time to find the seller.
• According to guidelines of RBI, if one bank is selling their securities to other then the
other bank should issue the check in the name of bank who is selling their securities and
not in the name of broker. But in this case, banks directly used to issue the check in the
name of Harshad Mehta (since in those days he was a famous broker with good name).
Banks used to deal directly with Harshad, which was illegal.
•Harshad used the money taken from bank B to manipulate the stock market.
•Now after some time if bank A would ask for the money against their bond or security
then Harshad used to go to bank C. Take money from it, ask for some time to give them
the security or bond against money and give that money to bank A. In the same way he
took money (funds) from many banks and used it to manipulate the stock market. Hence
Harshad used the RF Deal like a chain system, he took money and bonds from many
banks due to which he always had ample of money in his hands
17. Bank Receipt (BR)
In Ready Forward deal when any bank used to sell its
securities to another bank, then as a collateral first bank
used to give a receipt to buyer bank and not the actual
bond or securities. This receipt was called as Bank
Receipt (BR)
BR was the symbol of confirmation that selling bank has
got the money while buying bank has got the securities.
Harshad crossed all the limits when he started printing
the fake Bank Receipts (BR), and took the money from
banks in return to this fake receipts
18. •Harshad used this money to invest in stock market due to which the price of many stock
increased drastically.
•The share price of ACC went to Rs9000 from Rs200 in just few months. Due to this
increasing prices, people started investing in share market and hence prices of stocks
went to peak. Harshad used to sell his shares when market went at peak and earned
good profits.
•From this earned profits he used to return the money of banks and recollect his fake
receipt.
•This all went on continuation until the market was bullish and prices of shares were
increasing.
•After some time when the market went bearish the prices of stocks started decreasing.
•Harshad suffered huge losses due to this bearish market and lost all his money due to
which he was unable to return the money of banks.
•On 23rd April 1992, journalist Sucheta Dalal exposed the Harshad Mehta scam in the
journal of TOI.
•After this the bank’s realised that the receipts (BR) which they have received from
Harshad are fake and has absolutely no value.
•Due to Harshad Mehta Scam, banking system suffered the huge loss of almost Rs4000
crores.
•As soon as this scam was exposed, stock market crashed drastically. Due to this many
investors lost huge money and went bankrupt.
•The chairman of Vijaya Bank, who had issued the checks in name of Harshad Mehta,
realised that the BR receipts given by Harshad Mehta are fake and hence committed
suicide immediately after scam was exposed due to depression.
• CBI arrested Harshad Mehta on 9th Nov 1992 and filed him with 600 Civil Action Suits