The name Harshad Mehta has once again come up and making headlines because of the new web series titled 'Scam 1992'. Harshad Mehta was known as 'Big Bull' at the time when he was found responsible for one of India's largest stock market scam and 1992 market crash.

There are many names like Nirav Modi, Vijay Mallya, B Ramalinga Raju, Abdul Karim Telgi, who have done scams worth thousands of crores but the Harshad Mehta scam tops the list and makes everything else seem insignificant. Not because of the money involved but due to the modus-operandi and how India witnessed it.

The Securities Scam in 1992 is India's largest stock market scam that sent stock market, the banking system and the stockholders in distress.

Scams in India

He had become aware of the loopholes in the Indian banking system and defrauded banks to the tune of thousands of crores. Names like Vijay Mallya and Nirav Modi sound insignificant in front of Harshad Mehta. Using fraud means, Mehta laundered over Rs 24,000 crore in a span of three years by pumping a mammoth amount of money in the stock market, which sent the Sensex soaring from 1,000 to 4,500 points within a year.

Harshad Mehta's scam involved government securities and Ready-forward bank deals.

In 1992, it was mandatory for banks to invest in Government securities for which Ready Forward Deals or RF Deal came handy. Mehta used these deals and fake bank receipts as his instruments of fraud. Mehta was a broker back then and acted as a mediator for banks willing to sell or purchase securities. He used this to his advantage to cause one of the biggest scams.

Mehta got fake bank receipts from banks and continued borrowing money from multiple banks and kept investing in the stock market, which led to a boom. Because Mehta was a reputed broker, the banks would issue receipts in his name due to the high-interest rate that he offered to the banks.

Harshad Mehta

After the scam was exposed, Mehta sold his shares as banks were demanding the cash immediately. When he did so while the market was still at the peak; it caused the market to crash and people who invested following Mehta lost all their money.

Mehta's favourite shares included ACC, Apollo Tyres, Reliance, Hero Honda, Tata Iron and Steel Co (TISCO), BPL, Sterlite, and Videocon. The scam was reported by journalist Sucheta Dalal when she wrote a column about the fraud in the Times of India in 1992. Mehta was arrested and an investigation ensued.

Mehta was kept in Thane Jail where he died of cardiac arrest in 2001 at the age of 47. In order to avoid any manipulation in the stock market, a lot of reforms were brought in after the scam came to light. 

Vijay Mallya laundered to the tune of Rs 9,000 crore. His fall came with his decision to venture into the aviation industry. His Kingfisher Airlines bled with the airline defaulting on loans worth Rs 9,000 crore.

Nirav Modi, the billionaire jeweller was associated with Rs 13,400-crore PNB fraud. His showrooms were raided and precious stones and diamonds worth more than Rs 5,000 crore were seized while the Ministry of External Affairs suspended the jeweller's passport.

Unlike Harshad Mehta time, banks now are equipped with better security, technology and risk management tools but none of this seems to work when it comes to identifying and tackle frauds committed using age-old modus operandi.