The 1992 stock market scam, also known as the Harshad Mehta scam, was a financial scandal that occurred in India in 1992. The scandal was named after Harshad Mehta, a stockbroker who was accused of manipulating the Indian stock market through fraudulent means.
Mehta and his associates were accused of manipulating the stock market by using illegal funds obtained through a process known as "bank receipt" (BR) fraud. The funds were obtained by borrowing from banks using fake bank receipts, which were then used to buy shares in the stock market, artificially inflating their prices. Mehta and his associates then sold the shares at the inflated prices, making huge profits.
The scam was uncovered in 1992, when the Reserve Bank of India (RBI) discovered the BR fraud in the bank accounts of several stockbrokers. This led to a crash in the stock market, causing huge losses for investors and damaging the reputation of the Indian financial system.
Mehta was arrested and charged with several criminal offenses, including fraud, forgery, and cheating. He was found guilty on several charges and sentenced to prison. Several other individuals and companies were also charged in connection with the scam.
The 1992 stock market scam had far-reaching consequences for India's financial system. It led to a number of changes in regulations and oversight, including the formation of the Securities and Exchange Board of India (SEBI) to regulate the securities market. The scam also brought to light the need for more stringent regulations and oversight of the financial sector in India, which led to several changes in laws and regulations to prevent such scams in the future.
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