Harshad Mehta was a notorious Mumbai stockbroker who fraudulently withdrew funds from banks and used it to manipulate share prices on the Bombay Stock Exchange (BSE). He exploited loopholes in the Indian banking system and stock market to perpetrate what is still considered the biggest securities scandal in India’s history. The Harshad Mehta securities scam was worth Rs 4,000 crore, which is equivalent to Rs 24,000 crore in 2020. Harshad Mehta was convicted and jailed in 1998 and later died of a heart attack in 2001.
Wiki/Biography
Harshad Mehta was born on Thursday, July 29, 1954 (aged 47 at the time of his death) in Panelimoti, Rajkot, Gujarat. He spent his childhood in Kandivali, Mumbai, where his father ran a small textile business. Later, his family moved to Raipur, Chhattisgarh, where Harshad completed his schooling. He returned to Mumbai and obtained a Bachelor of Commerce degree from Lala Rajpat Rai College in 1976.
Family and caste
Harshad Mehta was born into a middle-class Jain family in Gujarat.
Parents and siblings
His father Shantilal Mehta ran a small textile business, while his mother Rasilaben Mehta was a housewife. He has three siblings – Sudhir Mehta, Hitesh Mehta and Ashwin Mehta. Harshad’s brother Ashwin Mehta is also a stockbroker in Harshad’s company. Ashwin obtained a law degree at the age of 50 and then personally won all the pending cases against him.
Harshad Mehta and his brother Ashwin Mehta
Harshad Mehta’s brother Sudhir Mehta
Relationships, Wife and Children
Harshad Mehta is married to Jyoti Mehta. Harshad has a son, Atul Mehta. While you can see various family photos of Harshad Mehta, there are no photos of his son as he has never been in the limelight.
Harshad Mehta’s wife Jyoti Mehta
Profession
Apart from studying for his Bachelor of Commerce from Lala Rapatre College in Mumbai, Mehta also worked in several odd jobs, usually related to selling cement, diamond classification, etc. He also worked as a salesman at New India Assurance Company. During this period, he developed a keen interest in the stock market, so much so that in 1980, he quit his existing job and started working for P. Ambalal, a stockbroker under the Bombay Stock Exchange (BSE). After working there for a year, in 1981, he joined the brokerage firm Harjivandas Nemidas Securities in a low-level clerical job. It was here that he met broker Prasann Pranjivandas, whom he considered as his “mentor”. After accumulating enough knowledge about the workings of the stock market, in 1984, Harshad started his own stockbroking firm by the name of “GrowMore Research and Asset Management”. By 1990, Harshad had created an atmosphere that inspired quite a few people to invest in his company and avail his services. He went from rags to riches in no time and made thousands of crores of rupees through his deeds. His image was hyped up by the media, earning him several nicknames like the ‘Amitabh Bachchan of the stock market’ and ‘The Big Bull.’ He owned a 15,000 sq ft sea view penthouse in Worli, Mumbai, and a collection of luxury cars, including an imported Toyota Lexus that was worth Rs 40 lakh at the time.
Harshad Mehta and his Toyota Lexus
1992 Securities Fraud Case and Exposure
scam: It was only in the early 90s that banks were allowed to invest in the stock market. Harshad had connections with the top brass of the banks and he offered them higher interest rates to transfer the funds directly into his personal accounts. The banks also issued fake bank receipts (BRs) in his name. After cleverly withdrawing funds from the banks, he used to invest huge sums in a few selected stocks, thereby increasing the prices of these stocks. This would attract other investors to also invest in these particular stocks, thereby further increasing the prices of these stocks. After the stock prices had risen sharply, he used to sell his shares anonymously and make huge profits. For example, in 1991, Harshad invested in the shares of United Cement Company (ACC) and pushed its share price from Rs 200 to Rs 9,000 (a 4,500% increase) in just three months.
Exposure: Many were skeptical of Harshad’s lavish lifestyle; however, journalist Sucheta Dalal was one step ahead and investigated the source of Harshad’s huge wealth in a short period of time. Eventually, on April 23, 1992, Sucheta exposed Mehta’s unethical methods of manipulating stock prices in a column in The Times of India, and the Harshad Mehta scam began to unravel. She revealed how Harshad Mehta defrauded the State Bank of India of Rs 500 crore by making SGL receipts disappear.
Impact of the scam
In the stock market
The 1992 scam had a huge impact on India’s capital markets and banking system. As the scam came to light, the Sensex index reached 4467 points in January 1992 but suddenly plummeted to 2529 points in August. It caused a loss of more than Rs 100,000 crore in the currency market.
About the banking system
After the scam came to light, the bank was left with invalid BRs and losses of up to Rs 4,000 crore. It also led to the suicide of Mr. BB Shetty, former chairman of Vijaya Bank, who had reportedly issued fake cheques to Harshad Mehta.
About the political environment
After the scam came to light, people pointed fingers at several politicians, including Reserve Bank of India Governor S. Venkitaramanan, brokers Pallav Sheth, Ajay Kayan and industrialist Aditya Birla. The political environment became tense when Harshad Mehta held a press conference and claimed that he paid Rs 1 crore to then Prime Minister PV Narasimha Rao to get rid of the scam.
Harshad Mehta talks to media at Taj Mahal Hotel in Mumbai and shows the Rs 1 crore suitcase he gave to Narasimha Rao
Arrest, conviction and sentencing
In November 1992, Harshad Mehta was arrested by the CBI and charged with 72 criminal offences and more than 600 criminal actions taken by various financial institutions and banks. He hired renowned lawyer Ram Jethmalani and was released on bail after three months.
Harshad Mehta and senior lawyer Ram Jethmalani attend a press conference after being released from prison in 1993
In 1999, Harshad Mehta was again convicted by the Bombay High Court in the Maruti Udyog scam case and sentenced to five years in prison.
Harshad Mehta is taken away after being arrested by Mumbai police
die
While serving his five-year sentence, Mehta was taken to a public hospital in Mumbai due to chest pains and died of a heart attack on December 31, 2001.
Medical negligence and “collective punishment” – his wife claims
In July 2022, Harshad Mehta’s wife Jyoti launched a website https://www.harshadmehta.in/ through which she made serious allegations against the prison authorities and the system of medical negligence and “collective punishment”. On the website, his wife accused the prison authorities and the police of medical negligence that led to her husband’s death. The website claims that
On that tragic day, the jail authorities ignored his sincere complaints for 4 hours after he suffered his first heart attack at around 7 pm. He immediately reported the unusual pain to his brother Sudhir who lived in the next cell and could hear Harshad but could not see him. The jail doctor saw him but had no medicine to treat the heart condition. So, Harshad requested them to give him Sorbitrate (the medicine) which I had prescribed in him 54 days ago and which was in the first aid kit kept by the jail. Since he was conscious, Harshad requested them to give him Sorbitrate which kept him alive for about 4 hours. Unfortunately, thereafter the jail authorities did not utilize these 4 golden hours to shift him to a hospital where his life could have been saved. ”
She further accused the system of being a “collective punishment” and said her family has been facing it ever since the death of her husband Harshad Mehta.
We are outraged that our fundamental rights and other cherished constitutional and human rights have been suspended and grossly violated over the past 30 years and that our family is being collectively punished despite the fact that we have not made a single securities transaction with the banks nor have any banks made any claims against us.”
Film and book adaptations
books
- The Scam: Who Wins, Who Loses, and Who Gets Away (1993)
- Scam: From Harshad Mehta to Ketan Parekh (2001)
Movie
- ‘1992 Scam: The Harshad Mehta Story’ is a very popular web series available to stream on SonyLIV, which is based on his life.
- The scandal was also depicted in several films, with characters like Natwar Shah in Aankhein (1993).
- The 2006 Indian Hindi crime drama Gafla is also said to have been inspired by Harshad Mehta’s life.
- Another movie ““Big Bull Market” Starring Abhishek Bachchan, the film based on his life is set to hit the screens soon.
Poster of the movie “Bull” starring Abhishek Bachchan
Facts/Trivia
- Harshad Mehta was a cricket enthusiast as a child.
- Harshad Mehta returned to Mumbai in 1973 with just Rs 40 in his pocket. He built a fortune worth billions of rupees from scratch.
- Even after being banned from the stock market, Harshad made a comeback in 1998 as a “stock market guru” and created his own website, harshadmehta.com, to share his analysis of the stock market and investment tips.
- Sucheta Dalal, the journalist who exposed the Harshad Mehta scam, was awarded the Padma Shri for Journalism in 2006.
On March 20, 2006, renowned business journalist Ms. Sucheta Dalal received the Padma Shri Journalism Award from President APJ Abdul Kalam in New Delhi.
Categories: Biography
Source: HIS Education