The above line comes in front of our life many times during our life time. But do we really care for it? Do we care to know the truth of anything happening around us? Did we care to know the biggest scam of Indian stock exchange? Do we care to know about Mr Harshad Mehta? Why he is known as big bull? What price he paid for being big bull? What he did? How he did? And why he did it? How it happened???
If u have desire to know about some truth about The Biggest Indian Stock Exchange Scam , read this :
Early life
Harshad Shantilal Mehta was born on 29 July in a Gujarati Jain family of modest means. His early childhood was spent in Mumbai where his father was a small-time businessman. Later, the family moved to Raipur in Chattisgarh after doctors advised his father to move to a drier place on account of his indifferent health. He also studied in S.S. Kalibadi Hr. Sec. School, Raipur, But Raipur could not hold back Mehta for long and he was back in the city after completing his schooling.
Somehow Harshad Mehta did not find his future in Raipur and could not stay away from Mumbai’s shiny life style.After coming to Mumbai Harshad Mehta joined his 1st job as dispatch clerk in the New India Assurance Company. But his 1st love is always Stock market. Harshad Mehta’s first love was stock exchange. During his work at new india insurance he has started investing in stock market with his brother Ashwin Mehta. And after sometimes he has managed to get BSE broker’s card. Who knows at that time that it was starting of great Indian scam!!
Growth period of Big Bull
After investing in stock exchange Harshad Mehta found some wrong patter on trades in stock exchange. He found that companies are not rising and falling as oer their fundamentals, and he started manipulating one stock named ACC. It was rising , rising and rising only. But Harshad Mehta had reason for all the questions for its rising. Its “Replacement Price Theory”. He was successful in explaining this theory to Indian public.
But the fact had another side too. Mr Mehta started buying this ACC at mid 1990 and then he made it public. It was Harshad Mehta’s trademarked style. He used to study fundamentals, he used to buy in big quantity and then he used to make is public. And demand of that stock used to rise like anything after recommendation of this Big Bull !!
Boom Period of Big Bull’s life
Year 1991. Mr Harshad Mehta is noow darling of Indian media. He was dream seller. He was not only Harshad Mehta now.. but he was The Harshad Mehta. Boss of “Growmore Research and Asset Management “. People know this personality as “ The Big Bull” of Indian stock exchange. Harshad Mehta thought different then others. The basic concept behind his view was very optimistic and somehow it was good for Indian money market too. He used to explain people that if fundamental of some company is good it should go up and should always goes up. But excess of anything is evil. The dream of great Indian story was becoming greed generator for Indian public and for Mr Harshad Mehta too. At his peak, he lived almost like a celebrity in a 15,000 sq ft house, which had a swimming pool ,beautiful golf patch. He also had a crush for flashy luxurious cars and no wonder he used to have some of the best car of 1990’s in his huge parking.
Recession Period in Big Bull’s life
His flashy life and charismatic personality was a problem for many Indian and international personalities. In 1992, 1st article came out against this dream merchant and the story was about 600+ Crores rupees scam !! it was written in article that Harshad Mehta had swiped 600 Crores. rupees from SBI. No one had clue at that time that it was starting of the most dramatic scam of Indian stock exchange. But fact was unknown till now. The amount is much more than what was said in that news article.
As per that article Mr Harshad Mehta used “Ready Forward Deal” for this scam. As per this deal he used to take some short term loan from banks and used this money in stock exchange to rise the price is the security. Pure manipulation. As per Indian law it was not allowed to give such RF loan to any individual person by bank. So it was clear that more than one banks were involved in this scam. With this money mr Harshad Mehta used to make waves in Indian stock exchange. He was using this banks illegally to manipulate the stock exchange mechanism.
He used the money he borrowed from lending bank on behalf of borrowing bank. And he invested that money in stock market. in this process the borrowing and lending banks knows only broker and may not know the name of the other party. And Harshad Mehta used this fact very well for his own personal benefit.
Another “technique” of rising money in stock exchange is “Bank Receipt”(BR). In BR one bank sells its government securities to another bank after particular time in future, and it gets payment from the lending bank. During that time if the borrower bank is returning money back they can get their government security back. And in this scam Mr Harshad Mehta played very crucial role along qith two small banks Bank of Karad and Metropolitan Co-op. Bank.. He used to get money from borrowing bank and it was used in stock market. at time of settlement he sell its security in which he earned lots of profit and he return the money back to the bank. Master mind at its best.(or worst?). But the game was not possible in case if share prises going down. And this is the reason behind Harshad Mehta’s dream for constant and one side growth
Depression of Big Bull’s life
Mr Harshad Mehta had one habit of showing off. Larger than life kind of personality can make the worst enemies for you. When he came to know this truth it was too late. When he got some finest luxurious car of the world and he was giving some picture pose of him feeding bears in zoo, some big names like Anand Rathi and Krishnakant Damani were hurt badly it was not a good news for the big bull. Whole bear cartel is against Harshad Mehta now. Everyone knew that Harshad Mehta is getting money from somewhere. but from where? The bear cartel has exposed the truth behind the constant rise of this big bull. They have used almost all the resources they have. It was surprising to point out here that even this bear cartel was using same “technique” as Harshad Mehta used. But the difference was , public appearance. Bears cartel used the money from overseas banks where as Harshad Mehta used Indian banks for his growth. And this act was “crime” as per Indian law books.
And on one not so fine day it was headline of Indian news paper regarding 4000 crore rupees scam in Indian stock market. Now Harshad Mehta was in trouble. As the scam was exposed the banks receipts (BR) value became almost zero. And it was enough reason for crash of some financial institutes which would lead Indian financial crises. Bear cartel was behind Harshad Mehta now. They filed as many cases as hey can against Harshad Mehta . They have used all their sources and made sure that Harshad Mehta would not get any bail.
Indian Stock Market crashed like anything. It was one of the worst time Indian market have seen till day. Indian public faced tough times. Many suicidal notes were found near dead bodies of Indian stock traders. The big bull, The dream merchant, The Harshad Mehta is now The most hated person!! 4000 crore scam ,many financial firms were involved, many political parties were involved, many big names involved in the same case, but surprisingly only one man was trapped. Harshad Mehta.
End of The Big Bull
Late 2001, place : Thane jail. The jail superintendent came to know about end of the bull era with news of Harshad Mehta’s death. Reason was heart attack. But it was shocking to know that before he died, he was found guilty in only one case..!!! That is how it happened. The chair person of Growmore Research and Asset Management died. And one Bull Run came to end.
Till now, it is still unknown what was the real story behind the entire scam. The recent Hindi movie 'Gafla' showed this scam in a different perspective.
Moral of the Article
Caution: Stock market investment is subject to market risk. Please read the offer document carefully before investing
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