• Manan Jain

Indian scams : Decoding the Harshad Mehta "Scam: 1992"

Updated: Jan 10

With the release of SonyLiv's Scam:1992 , there has been a lot of buzz AGAIN about the Harshad Mehta scam. Let's decode his systematic interlinked series of scams.


Harshad Mehta, One among India “Top Scammers”, one of the biggest manipulators, Harshad Mehta scam was not a single scam but a number of inter-linked scams that supported each other, He was a registered stockbroker with SEBI and owned a company named GrowMore Research and Asset Management. In those days government issues securities, issued mortgage papers to banks and in exchange took the money. Banks were allowed to internally exchange these mortgage papers in order to lend money to each other, but this process was done with a help of a middle-men who communicated between these two entities, take money from the moneylender, take the paper from money borrower and then distribute respectively, For example, Bank A wants to mortgage its paper to borrow money, they reach Mehta for the same, now Mehta used to find out another bank who wants to Lend and want to take the government security paper as Mortgage, Say Bank B, Mehta conducted the deal between these two banks.

Now according to the guidelines of SEBI, Bank A directly needs to give the Security Paper to B and Bank B needs to issue a cheque of money lent on the name of Bank A only, the middlemen should only be responsible for finding these two banks and help in conducting the deal.



But what happened in case of Mehta was that he Took Government security from Bank A and kept it with him and demanded some time to find a bank willing to lend Money, Similarly, he took money to be lent from Bank B into his Personal Account (which was against the Rule of SEBI) and demanded some time, he used that grace time period to keep that money with him, Now a third Bank C also wants to lend money, he takes money from C and demands time, After a certain delay in declared time there is a situation when at each point of time he has some money in his personal account that actually needed to be with some bank who is waiting for that money.

To understand it more easily let us take a general life example, A borrows money from B, after some time when B demands money back A borrows money from other person C and gives that to B, now when C asks back money, he borrows from D and gives to C and in a similar manner chain keeps on going and at each point of time A hold a certain amount of money.


scam 1992 newspaper harshad mehta

Apart from this he also used to issue fake bank receipts which help him to get money from banks, basically a kind of fake Government Bond Paper, which he used to destroy when he gives back the money.

In the case of Harshad Mehta, this some amount of money was quite big as he was dealing with Banks, the amount he held, he used to invest in the stock market. In the stock market, the scam technique he used was to pump up a stock, that is fictiously increasing the value of the stock by spreading false news and increasing the demand, in such situations a stock becomes overpriced. When the stock reaches a decent overpriced saturation level the investors and scammers dump that stock keeping their huge profits, as actually that company held no value and the stock was just overpriced it fells rapidly bringing other small investors into losses. He pumped up the price of ACC Cement Stock from Rs.200 to Rs.9000 in a mere 3 months.

Soon after some time Sucheta Dalal, a business journalist unfolds this scam. Harshad was sentenced to 5 years of rigorous imprisonment by Mumbai High Court in 1999, However, he died due to Heart-Attack on 31st December 2001.


harshad mehta newspaper scam 1992



Sony Liv came up with an amazing 10 episode web series on the life of Harshad Mehta and its IMDb rating touched 9.6/10 , which has broken the records of many shows including Game Of Thrones ; we hope this rating has not been "pumped" like he pumped the stock prices of ACC ;)


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