Basic Terms all you need to Know....
BSE - Bombay Stock Exchange (Oldest Stock Exchange in India)
Stock - Stock is a share in the ownership of a company.
Stock Price - The price value of that stock.
Government Bonds - A form of securities issued by government to raise money from investors to meet their ongoing project expanses.
Bear Run - Basically a short term Recession or MANDI in Stock Market.
Harshad Mehta was Indian Stock Broker. He was the founder of Grow More and Asset Management Company which used to deal as a Broker in an Indian Stock Market. He was also known as The Big Bull. In those times, Govt Bonds were must to be kept and operated by all BANKS. Whenever any bank needed money they go for Ready Forward Deal with other bank. In simple words Short Term Loan. In hindi language it means GIRVI.
In those times Harshad Mehta was one of the most famous and trusted brokers in the market. His work was to mediate between the banks for bonds selling and purchasing. He started taking Govt Bonds from one Bank and on ther side he started taking money from other Bank. Like this he took so many bonds and huge amount of money from different banks with a help of fake receipts. Also the banks were issuing the cheques on the name of Harshad Mehta. Although they were not allowed to do that.
Now the money which was being given to Harshad from Banks, he was using that money to SURGE the stock price in market. In simple language he was manipulating the stock price by pumping huge amount of money. By this he used to take the stock price at a very high level and after that dumped those stocks and used to earn very high profits. By the same process he took the stock price of ACC from 200 to 9000.
All this thing and process took the stock market growth at a very high level with very fast rates. Harshad Mehta earned huge amount of profits from the market. He also returned that money back to few banks from which he took on the behalf of bonds and collected back his fake receipts from Banks. But he used this Ready Forward Deal process as chain system with other banks for more money to surge the stock price.
But suddenly stock market faced Bear Run. Due to which Harshad faced huge amount of loss and failed to return back all the money he took from bank. On April 23, 1992 a journalist Sucheta Dalal wrote an article in Times of India and mentioned the whole scam which was done by Harshad. Due to this article and scam, the Indian Bank system faced 3K - 4K Crore loss. Many investors lost their money in this scam.
Due to this scam, chairman of Vijaya Bank commited suicide.
SEBI banned Harshad Mehta to trade in Indian Stock Market.
Soon he was arrested by Mumbai Police and was kept in Thane Jail.
On December 31, 2001 he died in a jail due to Heart Attack. Many steps were taken after that to fix the loopholes in Banking System and Stock Market.
For more clarification you can watch a movie GAFLA or a web series on Sony LIV called SCAM 1992.
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