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What was the harshat mehata scam in indian stock market ? How is comes to notice of RBI ?
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<p>[QUOTE="radhe, post: 185, member: 1046"]</p><p>Harshad Mehta was an Indian stockbroker and investor who was responsible for one of the biggest financial scams in Indian history. Born on July 29, 1954, in a middle-class family in Mumbai, Harshad Mehta had a modest beginning as a stockbroker but rose to fame in the 1980s and early 1990s for his exceptional trading skills and ability to manipulate the stock market.</p><p></p><p>Mehta was known for his aggressive buying and selling of stocks, which earned him the title of the "Amitabh Bachchan" of the Indian stock market. He was known for his flashy lifestyle and love for luxury cars and expensive watches.</p><p></p><p>The Harshad Mehta scam, also known as the securities scam of 1992, involved the manipulation of the Bombay Stock Exchange (BSE) by Mehta and his associates. Mehta had discovered a loophole in the banking system, which allowed him to borrow money from banks and use it to buy stocks in the stock market. He then used these stocks as collateral to borrow more money from banks, which he used to buy more stocks.</p><p></p><p>Mehta's modus operandi involved manipulating the stock prices of selected stocks, such as ACC, Reliance, and Videocon, to create an artificial demand for these stocks. He would then buy these stocks in large quantities, driving up their prices even further. Mehta was able to manipulate the stock prices by bribing officials in the banking sector and the stock exchange.</p><p></p><p>The scam was finally uncovered in 1992, when the Reserve Bank of India (RBI) discovered that Mehta and his associates had been borrowing huge amounts of money from banks using fake bank receipts. The scam caused panic in the stock market, and the BSE lost over 1,000 points in a single day, wiping out the savings of thousands of investors.</p><p></p><p>Mehta was arrested and charged with various financial crimes, including fraud, forgery, and bribery. He was eventually found guilty and sentenced to five years in prison. Mehta died in 2001 at the age of 47, while serving his sentence in a Mumbai jail.</p><p></p><p>The Harshad Mehta scam was a wake-up call for the Indian financial system and led to several reforms in the banking and stock exchange sectors. The Securities and Exchange Board of India (SEBI) was established to regulate the stock market, and the RBI tightened its regulations on bank lending practices.</p><p></p><p>In conclusion, Harshad Mehta was a brilliant stockbroker who used his skills to manipulate the stock market and create a massive financial scam. The Harshad Mehta scam was a reminder of the dangers of unchecked greed and corruption in the financial system. It led to much-needed reforms in the Indian financial system, which have made it more robust and resilient.</p><p>[/QUOTE]</p>
[QUOTE="radhe, post: 185, member: 1046"] Harshad Mehta was an Indian stockbroker and investor who was responsible for one of the biggest financial scams in Indian history. Born on July 29, 1954, in a middle-class family in Mumbai, Harshad Mehta had a modest beginning as a stockbroker but rose to fame in the 1980s and early 1990s for his exceptional trading skills and ability to manipulate the stock market. Mehta was known for his aggressive buying and selling of stocks, which earned him the title of the "Amitabh Bachchan" of the Indian stock market. He was known for his flashy lifestyle and love for luxury cars and expensive watches. The Harshad Mehta scam, also known as the securities scam of 1992, involved the manipulation of the Bombay Stock Exchange (BSE) by Mehta and his associates. Mehta had discovered a loophole in the banking system, which allowed him to borrow money from banks and use it to buy stocks in the stock market. He then used these stocks as collateral to borrow more money from banks, which he used to buy more stocks. Mehta's modus operandi involved manipulating the stock prices of selected stocks, such as ACC, Reliance, and Videocon, to create an artificial demand for these stocks. He would then buy these stocks in large quantities, driving up their prices even further. Mehta was able to manipulate the stock prices by bribing officials in the banking sector and the stock exchange. The scam was finally uncovered in 1992, when the Reserve Bank of India (RBI) discovered that Mehta and his associates had been borrowing huge amounts of money from banks using fake bank receipts. The scam caused panic in the stock market, and the BSE lost over 1,000 points in a single day, wiping out the savings of thousands of investors. Mehta was arrested and charged with various financial crimes, including fraud, forgery, and bribery. He was eventually found guilty and sentenced to five years in prison. Mehta died in 2001 at the age of 47, while serving his sentence in a Mumbai jail. The Harshad Mehta scam was a wake-up call for the Indian financial system and led to several reforms in the banking and stock exchange sectors. The Securities and Exchange Board of India (SEBI) was established to regulate the stock market, and the RBI tightened its regulations on bank lending practices. In conclusion, Harshad Mehta was a brilliant stockbroker who used his skills to manipulate the stock market and create a massive financial scam. The Harshad Mehta scam was a reminder of the dangers of unchecked greed and corruption in the financial system. It led to much-needed reforms in the Indian financial system, which have made it more robust and resilient. [/QUOTE]
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