Harshad Shantilal Mehta was an Indian stockbroker, businessman, and convicted fraudster. Mehta gained infamy for his involvement in the 1992 Indian securities scam, valued at approximately ₹30,000 crore, which led to market manipulation. Of the 27 criminal charges brought against him, he was convicted of only four before his death from a sudden heart attack in 2001 at the age of 47.
Mehta's scheme involved a massive stock manipulation operation financed by worthless bank receipts brokered for "ready forward" transactions between banks. He was convicted by the Bombay High Court and the Supreme Court of India for his role in a financial scandal valued at ₹100 billion (US$1.2 billion), which took place on the Bombay Stock Exchange (BSE). This scandal exposed loopholes in the Indian banking and BSE transaction systems, prompting SEBI to introduce new regulations to address these issues. Mehta remained on trial for nine years, until his death in late 2001.
Early Life and Education
Harshad Shantilal Mehta was born on 29 July 1954 in Paneli Moti, Rajkot district, into a Gujarati Jain family. His early childhood was spent in Borivali, where his father worked as a small-time textile businessman.
Mehta completed his early education at Janta Public School, Camp 2, Bhilai. A cricket enthusiast, he showed little academic promise and moved to Mumbai after school to pursue higher studies and find work. He graduated with a Bachelor of Commerce (B.Com) degree from Lala Lajpatrai College, Bombay, in 1976 and worked various odd jobs over the next eight years.
Work and Life
During this period, Harshad Mehta held sales-related jobs, including selling hosiery, cement, and sorting diamonds. He began his career as a salesperson at the Mumbai office of New India Assurance Company Limited (NIACL). His interest in the stock market grew during this time, leading him to resign and join a brokerage firm. In the early 1980s, he took a clerical job at Harjivandas Nemidas Securities, where he worked as a jobber under Prasann Pranjivandas, whom he considered his "guru."
Over the next decade, Harshad Mehta held increasingly prominent positions in brokerage firms. By 1990, he had risen to prominence in the Indian securities industry, with media outlets referring to him as the "Amitabh Bachchan of the Stock Market."
Rise to Fame
Harshad Mehta founded Grow More Research and Asset Management in 1986 with financial support from his associates. By the early 1990s, prominent investors began utilizing his services. He gained significant attention for trading heavily in the shares of Associated Cement Company (ACC). Under Mehta's influence, the price of ACC shares skyrocketed from ₹200 to nearly ₹9,000. He defended this trading strategy by introducing the "replacement cost theory," arguing that the stock had been undervalued and the market was merely correcting itself.
During this period, Harshad Mehta's image as "The Big Bull" was amplified by the media. His opulent lifestyle, including a 15,000-square-foot sea-facing penthouse in Worli with a mini-golf course and swimming pool, and a fleet of luxury cars like the Toyota Corolla, Lexus LS400, and Toyota Sera, became a symbol of his success.
The Scam
Harshad Mehta's scheme involved manipulating the stock market using uncollateralized bank receipts in "ready forward" transactions. He used bank funds, promising higher returns, and temporarily transferred the money to his account under the pretext of buying securities. This artificially inflated the prices of select stocks like ACC, Sterlite Industries, and Videocon, which he later sold for a profit.
One key instrument in his scam was the use of fake bank receipts (BRs). These BRs were issued without collateral and passed to other banks, which unknowingly lent money to Mehta, assuming the receipts were backed by government securities. This fraudulent system continued as long as stock prices rose. When the scam was exposed, the market crashed, leaving several banks with worthless BRs and a loss of ₹40 billion (equivalent to ₹310 billion or US$3.7 billion in 2023).
Exposure and Fallout
On 23 April 1992, journalist Sucheta Dalal exposed Harshad Mehta's illegal methods in The Times of India. The scandal implicated several high-profile figures, including Citibank, industrialists, politicians, and the RBI Governor S. Venkitaramanan.
Legacy
Mehta's life and the 1992 securities scam were chronicled in the book The Scam: From Harshad Mehta to Ketan Parekh by Sucheta Dalal and Debashis Basu.
Media Depictions
- Scam 1992 (2020): A web series on SonyLIV, inspired by Dalal's book, features Pratik Gandhi as Mehta.
- The Big Bull (2021): A Bollywood film starring Abhishek Bachchan, loosely based on Harshad Mehta's life.
- Other portrayals include the film Gafla (2006), the series The Bull of Dalal Street (2020), and references in Yeh Un Dinon Ki Baat Hai (2018).
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