Harshad Mehta Bull Run: A Tale of Greed and Fraud

Harshad Mehta was a name that shook the Indian stock market in the early 1990s. He was a stockbroker who rose to distinction and fortune by controlling the market and making a monstrous bull run that made him and his clients rich. He was likewise a fraudster who utilized unlawful means to subsidize his exchanges and redirected cash from banks and other monetary establishments.. His scam was exposed in 1992, leading to a crash in the market and a loss of trust in the system. His story is an illustration in how covetousness can dazzle individuals to the dangers and results of their activities.

Who was Harshad Mehta?

Harshad Mehta was born in 1954 in a Gujarati Jain family in Rajkot, Gujarat. He moved to Mumbai after completing his B.Com degree from Lala Lajpatrai College in 1976. He worked as a salesperson, a hosiery seller, a cement dealer, and a diamond sorter before joining a brokerage firm as a clerk. He learned the ropes of the stock market from his mentor Prasann Pranjivandas Broker and started trading on his own account in 1986.

He soon gained a reputation as a savvy trader who could spot opportunities and make huge profits. He had a loyal clientele of high-net-worth individuals, corporates and institutions who trusted his advice and followed his tips. He also had a charismatic personality and a flamboyant lifestyle that attracted media attention. He was often called the ‘Amitabh Bachchan’ of the stock market or the ‘Big Bull’ because he was said to have started the bull run in the market. He invested heavily in certain stocks, especially those of Reliance Industries, ACC, Apollo Tyres, BPL, Sterlite Industries and Videocon, and drove up their prices by creating an artificial demand.

How did he pull off the scam?

Harshad Mehta’s scam involved exploiting a loophole in the banking system that allowed him to access funds from banks without any collateral or security. He used these funds to buy shares in the stock market and inflate their prices. He then sold these shares at a higher price and made huge profits. He also paid back the banks with interest and kept the difference as his commission.

The loophole he exploited was related to the ‘ready forward’ (RF) deals that banks used to lend and borrow money from each other for short periods of time. These deals were done through brokers who acted as intermediaries between the banks. The brokers were supposed to provide bank receipts (BRs) as proof of transactions between the banks. These BRs were essentially promissory notes that confirmed that one bank had deposited securities with another bank as collateral for the loan.

However, Harshad Mehta managed to get fake BRs issued by some small and cooperative banks that did not have any securities to deposit with other banks. He then used these fake BRs to borrow money from other banks that trusted him as a broker. He also forged signatures of bank officials and created fake accounts to transfer money from one bank to another. He used this money to buy shares in the stock market and create a bull run.

He also bribed some bank officials and politicians to keep his scam going. He paid hefty commissions to some bank managers who helped him get fake BRs or overlooked his irregularities. He also allegedly paid Rs 1 crore to then Prime Minister P.V. Narasimha Rao to influence policies in his favor.

How was he caught?

Harshad Mehta’s scam came to light in April 1992 when journalist Sucheta Dalal exposed it in an article in The Times of India. She revealed how Harshad Mehta had siphoned off over Rs 500 crore from the State Bank of India (SBI) using fake BRs. She also exposed how he had manipulated the stock prices of several companies using his clout and funds.

The article set off an examination by different organizations, including the Focal Agency of Examination (CBI), the Hold Bank of India (RBI), the Protections and Trade Leading body of India (SEBI) and the Joint Parliamentary Council (JPC). Harshad Mehta was arrested and charged with 72 criminal offences and more than 600 civil action suits. He was blamed for cheating banks of over Rs 4,000 crore and making a deficiency of over Rs 10,000 crore the financial exchange.

What were the consequences of his scam?

Harshad Mehta’s scam had a devastating impact on the Indian economy and the stock market. It eroded the confidence of investors and the public in the financial system and the regulatory authorities. It also exposed the loopholes and weaknesses in the banking system and the stock exchange mechanism. It led to a crash in the stock market that wiped out the wealth of millions of investors. It also triggered a liquidity crisis in the banking sector that affected the credit availability and growth prospects of the economy.

The scam also led to several reforms and changes in the financial sector. The RBI tightened its supervision and regulation of banks and introduced new guidelines for RF deals and BRs. The SEBI strengthened its role as a market regulator and introduced new rules for disclosure, transparency and accountability of brokers and companies. The BSE also improved its trading system and surveillance mechanism to prevent manipulation and fraud.

What happened to Harshad Mehta?

Harshad Mehta spent most of his time in jail or in court after his arrest in 1992. He was granted bail in 1995 but was rearrested in 1998 for another scam involving bank funds. He died of a heart attack in Thane prison on December 31, 2001 at the age of 47. He was still facing trial for several cases at the time of his death.

His family claimed that he was innocent and had been framed by his rivals and enemies. They likewise guaranteed that he had repaid the majority of the cash he had acquired from banks and that he had been made a substitute for the foundational disappointments of the monetary area.

His legacy lives on as one of the most notorious and controversial figures in the history of the Indian stock market. His story has been depicted in books, films, documentaries and web series. He is remembered as a genius who revolutionized the stock market and as a villain who ruined it.


Harshad Mehta’s bull run was a tale of greed and fraud that shook the Indian economy and the stock market. His scam exposed the flaws and loopholes in the financial system and the regulatory authorities. His rise and fall is a lesson in how greed can blind people to the risks and consequences of their actions.

Zayan Ali

Zayan Ali is an experienced blog writer with 3 years of expertise, known for captivating readers in diverse niches and being a sought-after online content creator.

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