The Harshad Mehta Scam of 1992 is one of the most significant financial scandals in Indian history. Mehta exploited the banking system by using forged bank receipts to secure large loans. This money was then used to manipulate stock prices, creating an artificial boom in the market. The scam eventually unraveled, leading to a massive collapse in stock prices and widespread financial losses.
Modus Operandi of the Scam
Mehta's scheme involved the following steps:
- Obtaining funds from banks using forged bank receipts.
- Using the funds to purchase large quantities of shares, driving up their prices.
- Creating a false sense of prosperity in the market, attracting more investors.
This modus operandi exposed the vulnerabilities of the Indian financial system and highlighted the need for stricter regulations.
