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Final harshad mehta - Case study

Case study
Course

MBA (202)

26 Documents
Students shared 26 documents in this course
Academic year: 2021/2022
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This document has been uploaded by a student, just like you, who decided to remain anonymous.
Savitribai Phule Pune University

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HARSHAD MEHTA SCAM.

INTRODUCTION.

Harshad was the richest man between 1991 and 1992, beating out wealthy professions like actresses. The countless scams perpetrated by this guy are well known. He has conned a lot of wealthy people and even had political backing. He had two arrests. He defrauded banks, stole money, and conned stock brokers to live a lavish lifestyle in India. He was knowledgeable about every facet of financial marketing and share marketing. He acted as a financial intermediary between banks.

The article describes in great detail everything Harshad performed from the time of his birth till his passing. He has committed fraud, the reasons for which he did so, the consequences of his actions, and other things.

1 st scam of Harshad Mehta.

 Through his employment, Harshad Mehta gained knowledge of the stock market and its strategies. He did not learn them from books or the internet—he learnt them through his own experience. He was a clever individual who quickly became knowledgeable about the stock market. He was well-versed in the ups and downs of the stock market.  To expand his business, he founded his own brokerage company in 1986 called "Grow More Research and Asset Management" to acquire and sell public shares in particular companies. His clients started coming to him for guidance on where to make investments or buy stock. He chose a filthy company that is useless, where the businesses don't even have an address, or a business that doesn't even exist.  He was referred to as both the "Amitabh Bachchan of the Indian stock market" and the "Red Bull of Dalal Street." The shareholders erred by failing to verify the information he provided. They bought those shares because they had complete faith in him.  The tactic used to boost these companies' share market values was to present them as successful businesses that provide advantages for their shareholders.  This was his first scam because there was no internet in the 1990s to check. The stock market was very profitable for him.

2 nd scam of Harshad Mehta.

 Harshad Mehta then decided to go forward by choosing to work as a broker for banks in the financial arena. By pretending to be a broker to several of the banks, he deceived them.  In order to lend money and receive money when a bank needs it using the bank's securities, bank brokers connect two banks.  In order to transfer money to the receiving bank, Harshad Mehta gave the lending bank instructions to deposit the money into his personal account.

 Similar to this, he used falsified bank receipts to trigger and obtain illegal cash from numerous reputable banks, including National Housing Bank, State Bank of India, and UCO Bank.  He started by properly crediting these payments to the banks, and over time he subtly started to defraud those banks by fraudulently crediting funds to his accounts. Through this fraudulent scheme, he was able to gain additional funds in the millions, which he then put into his little firm.  The money that was given to the bank for protection or security is the money that belonged to the people. He received the funds, which were ineffectively managed, and wasted them. When he started to become more affluent, he stopped offering money and compelling everyone who was wealthy to fall for his frauds.  Everyone started to pay attention to his behaviour, especially Times of India correspondent Sucheta Dalal. When she discovered every one of Harshad's frauds, she began to take notes of his activities.  He had perpetrated a $1 billion scam to buy stocks from the Bombay Stock Exchange, which caused a serious collapse of the Indian stock market and a loss to the financial system of Rs. 3500 – 4000 crores, known as the scam 1992.  He was taken into custody and eventually released on bail. 74 criminal cases were brought against Harshad Mehta. Later, he was jailed after being accused of a different financial crime.

The crimes that Harshad Mehta committed.

Fraud is a capital market swindle when the truth is manipulated to boost profits. This
con contains four main components.
Division of Funds

In order to encourage brokers' activities on the stock market, money is improperly transferred from the banking system to them.

Intra-Day Trading

The fundamental technique entailed buying large amounts of particular stocks at the beginning of the day, which caused a sharp rise in the stock price, and then selling them off at the end of the day in order to realise enormous profits.

Use of Ready Forward(RF) to maintain Statutory Liquidity

Ratio(SLR)

A ready forward loan is a brief loan given by one bank to another, typically for a period of 15 days or less. It's the same as one bank selling another their securities with the promise to buy them back at a predetermined price. Early in the 1990s, the Statutory Liquidity Ratio in India mandated that banks maintain a specific proportion of their deposits in the form of government securities (SLR). The entire bond buying and selling process was managed by brokers, who were also

Conclusion

Thoughtful and ambitious, Harshad Mehta chose the incorrect road to achieve his goals. This course ultimately resulted in his demise. The swindle exposed a number of flaws, one of which was the total lack of transparency in the financial markets. The prevalence of irregularities of all kinds was so great that even very irregular transactions drew little attention. This is the perfect environment for a hoax to emerge and grow to hazardous proportions. The worst financial scandal to ever occur in India was the Harshad Mehta scam, which was extremely public. Numerous people had passed away, and some had even killed themselves. Due to the hoax, all of the wealthy people were exhausted both mentally and physically. He was a daring stock broker by nature and was knowledgeable about both the flaws in the financial system and strategies for taking advantage of them.

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Final harshad mehta - Case study

Course: MBA (202)

26 Documents
Students shared 26 documents in this course

University: ITM Group of Institutions

Was this document helpful?
HARSHAD MEHTA SCAM.
INTRODUCTION.
Harshad was the richest man between 1991 and 1992, beating out wealthy professions like
actresses. The countless scams perpetrated by this guy are well known. He has conned a lot of
wealthy people and even had political backing. He had two arrests. He defrauded banks, stole
money, and conned stock brokers to live a lavish lifestyle in India. He was knowledgeable about
every facet of financial marketing and share marketing. He acted as a financial intermediary
between banks.
The article describes in great detail everything Harshad performed from the time of his birth till his
passing. He has committed fraud, the reasons for which he did so, the consequences of his actions,
and other things.
1st scam of Harshad Mehta.
Through his employment, Harshad Mehta gained knowledge of the stock market and its
strategies. He did not learn them from books or the internet—he learnt them through his
own experience. He was a clever individual who quickly became knowledgeable about the
stock market. He was well-versed in the ups and downs of the stock market.
To expand his business, he founded his own brokerage company in 1986 called "Grow More
Research and Asset Management" to acquire and sell public shares in particular companies.
His clients started coming to him for guidance on where to make investments or buy stock.
He chose a filthy company that is useless, where the businesses don't even have an address,
or a business that doesn't even exist.
He was referred to as both the "Amitabh Bachchan of the Indian stock market" and the "Red
Bull of Dalal Street." The shareholders erred by failing to verify the information he provided.
They bought those shares because they had complete faith in him.
The tactic used to boost these companies' share market values was to present them as
successful businesses that provide advantages for their shareholders.
This was his first scam because there was no internet in the 1990s to check. The stock
market was very profitable for him.
2nd scam of Harshad Mehta.
Harshad Mehta then decided to go forward by choosing to work as a broker for banks in the
financial arena. By pretending to be a broker to several of the banks, he deceived them.
In order to lend money and receive money when a bank needs it using the bank's securities,
bank brokers connect two banks.
In order to transfer money to the receiving bank, Harshad Mehta gave the lending bank
instructions to deposit the money into his personal account.

Students also viewed

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