As you all know that Scam 1992 released on October 9, 2020, and premiered on SonyLiv. It tells about the life of Harshad Mehta, a stockbroker who brought the stock market and its disastrous collapse to dizzying heights.
Pratik Gandhi is the main Lead Actor of this web series, played the role of Harshad Mehta but we’re not gonna talk about the actor, we’re gonna talk about the Scam 1992
The story of Harshad Mehta’s life.
Harshad Shantilal Mehta was born in July 1954 at Paneli Moti, Rajkot, Gujarat in Gujarati Jain Family. His father was a small-time Textile Businessman. Later, The Family moved to Raipur, Madhya Pradesh. He completed B.Com in 1976 from Lala Lajpat rai College, Mumbai, and worked for the next 8 years in odd jobs. Mehta began his career in the Mumbai office of New India Assurance Company Limited as a salesman (NIACL).
He became involved in the stock market during this time and, after a few days, resigned and entered a brokerage company.He moved to a lower-level clerical role at the brokerage firm Harjivandas Nemidas Securities in the early 1980s, where he worked for the broker Prasann Pranjivandas Broker, who he considered his “Guru” Over a period of ten years, beginning in 1980, he worked in positions of rising responsibility at a variety of brokerage firms.
Grow More Analysis and Wealth Management, as the BSE auctioned a broker’s card with the financial assistance of associates. In 1986, he deliberately began to trade. By the beginning of 1990, a number of eminent individuals started investing in his business and making use of his services. He started investing heavily in the shares of Associated Cement Company at this time (ACC). Due to a huge spate of purchases from a set of brokers, including Mehta, the price of shares in the cement company gradually grew from about 200 to almost 9,000.
By 1990, he had risen to a prominent role in the Indian securities industry, promoting him as “Amitabh Bachchan of the Stock market” by the media (including influential magazines such as Business Today).
Terms such as ‘The Big Bull’ and ‘Raging Bull’ regularly used in reference to him at that time. In the 1990s, he became particularly famous overtime for his money, which he did not shy away from bragging about through his 15,000 sq. Ft. Penthouse and a number of vehicles. Suchita Dalal, a journalist, described him as charismatic, ebullient, and recklessly optimistic. Perhaps it was this recklessness which, through his ambitious schemes, led to his downfall.
Harshad Mehta Role as a Broker –
Harshad Mehta, as mentioned above, used to broker RF deals. He managed to persuade the banks to draw the cheques in his name. He would then manage to transfer the money deposited in his account into the stock markets. The broken system was then taken advantage of by Harshad Mehta and the scam was taken to new stages.
There will be only 2 banks involved in a typical RF transaction. The securities will be taken in return for cash from a bank. What Harshad Mehta did here is that he would rope in a third bank when a bank would request its securities or cashback. And, finally, a fourth bank, and so on and so on. There were now several banks all linked by a network of RF deals instead of getting only two banks involved.
Harshad Mehta provide Benefits To Banks –
The banks were aware of the actions of Harshad Mehta but chose to look away as they, too, would benefit from the stock market gains Harshad would produce. He would pass the banks a percentage. This will help banks to retain profitability as well.
The Scam –
Early on, Harshad Mehta found the dependency of RF deals on BR’s. The RF deal system also put a great deal of reliance on influential brokers like Harshad Mehta, in addition to this. He agreed, along with two other banks, Bank of Karad (BOK) and the Metropolitan Co-operative Bank (MCB), to take further advantage of the scheme. He was able to forge BRs with the aid of these two banks. The BR’s that are forged not backed by any securities. It meant that they were all paper pieces with no real meaning.
This is similar to a situation where you can avail of loans with no collateral. This money would also be injected into the stock market by Harshad Mehta, increasing his influence.
The RBI is expected to perform on-site inspections and audits of the banks’ investment accounts. A detailed audit would show that the amount indicated by the circulating BRs was considerably higher than the banks’ government bonds. It failed to act decisively against the Bank of Karad (BOK) and the Metropolitan Co-operative Bank when the RBI found irregularities (MCB).
Life After Investigation –
Harshad Mehta was found guilty of 72 criminal offenses and more than 600 criminal action suits. After spending 3 months in custody Mehta released on a bail. The drama however never subdued but only intensified. In a press conference, Harshad Mehta said that to secure his release, he had bribed Prime Minister P. V. Narasimha Rao for Rs 1 crore.
The suitcase in which he allegedly brought the money was also displayed by Harshad Mehta. However, the CBI never found any concrete evidence of this. Harshad Mehta has now been banned from investing in the stock market as well.
Investigators thought that the original suspect who forged the bank receipts was not Harshad Mehta. It was clear that using these strategies, Harshad Mehta capitalized and made money. They also saw the possibility that by blowing the whistle on him and revealing the scam through Sucheta Dalal, the bear cartels ganging up on Harshad Mehta could get rid of the bearish markets. However, this attracted the attention of the investigators to the bear cartel, as they had already used the same means as Harshad Mehta. Eventually, those other brokers tried, too.
After that, as a business guru sharing advice on his website and journal columns, Harshad Mehta made a comeback. In September 1999, he was convicted by the Bombay Highcourt and sentenced to five years in jail. Mehta died after suffering from cardiac arrest in Thane Prison on 31 December 2001 while in criminal custody.