Harshad Mehta Scam (1992) – The Biggest Stock Market Fraud in India Who was Harshad Mehta? * A stockbroker known as the “Big Bull” for driving a massive stock market rally. * Used loopholes in the banking system to manipulate stock prices. How the Scam Worked? * Mehta took advantage of the bank’s lack of direct investment in the stock market. * Used fake bank receipts (BRs) to borrow money from banks. * Significant capital injections into stocks including ACC drove prices higher * Example ACC Stock increased from ₹200 to ₹9,000). * Created a stock market bubble by artificially inflating prices. The Exposure of the Scam! * April 1992 – Journalist Sucheta Dalal exposed the fraud in The Times of India. * ₹3,500 crore scam shook the Indian financial system. * Led to a major stock market crash – Sensex plunged over 50% from its peak. Impact on Market & Economy * Sensex Crash – Fell from 4,467 to 2,529 in months. * Banks suffered huge losses, many collapsed. * SEBI strengthened stock market regulations. * Led to the introduction of electronic trading & depository system. Final Fate of Harshad Mehta * Arrested in 1992, released on bail but faced multiple cases. * Died in 2001 in prison due to a heart attack. Lessons from the Scam! * Always be aware of market manipulations. * Regulations are crucial to protect investors. * Investing based on speculation can be risky!