Harshad Mehta was an infamous Bombay-based stockbroker who fraudulently drew capital out of banks and used it to artificially manipulate the price of shares at the Bombay Stock Exchange (BSE). He took advantage of the loopholes in the Indian banking system and the stock market to carry out what is still regarded as the biggest ever Indian securities scandal. The Harshad Mehta securities scam of worth Rs. 4,000 crores is equivalent to Rs. 24,000 crores in 2020. Harshad Mehta was convicted of his crimes and lodged in a prison in 1998, and later died of a heart attack in 2001.
Harshad Mehta was born on Thursday, 29 July 1954 (age 47 years at the time of death) in Paneli Moti, Rajkot, Gujarat. He spent his early childhood years in Mumbai’s Kandivali, where his father used to run a small textile business. Later, his family moved to Raipur, Chhattisgarh, where Harshad completed his schooling. He returned to Mumbai and graduated in B.Com from Lala Lajpat Rai College in 1976. The Quint
Family & Caste
Parents & Siblings
His father, Shantilal Mehta, ran a small textile business, whereas his mother, Rasilaben Mehta, was a homemaker. He had three siblings – Sudhir Mehta, Hitesh Mehta, and Ashwin Mehta. Harshad’s brother, Ashwin Mehta, was also a stockbroker in Harshad’s firm. Ashwin earned a law degree at the age of 50 and then himself fought all the pending cases against him.
Relationships, Wife & Children
Harshad Mehta was married to Jyoti Mehta. Harshad had a son, Atur Mehta. While you can spot various family pictures of Harshad Mehta, but there is no photo of his son, as he was never brought into the limelight.
Besides studying B.Com at Lala Lajpatrai College, Mumbai, Mehta was engaged in several odd jobs which were often related to selling cement, categorising diamonds, and so on. He also worked as a salesman in New India Assurance Company Limited. During this time, he got interested in the stock market so much that in 1980, he resigned from his existing job and started working for P. Ambalal, a stockbroker affiliated to the Bombay Stock exchange (BSE). After working there for a year, in 1981, he joined a lower clerical job at Harjivandas Nemidas Securities, a brokerage firm. This was the firm where he met broker Prasann Pranjivandas, whom he regarded as his ‘guru.’ After accumulating enough knowledge about the functioning of the share market, in 1984, Harshad started his own stock brokerage firm by the name “GrowMore Research and Asset Management.” By 1990, Harshad had already created an aura that inspired a significant number of people to invest in his firm & utilise his services. He went from rags to riches in no time and earned thousands of crores of rupees through his deeds. His image was so heightened by the media that it earned him several epithets such as “The Amitabh Bachchan of the stock market” & “The Big Bull”. With a sea-facing 15,000 square feet penthouse in Mumbai’s Worli, he also had a collection of fancy cars, which included an imported Toyota Lexus worth 40 lakh rupees during that time.
The 1992 Securities Scam & Exposure
The Scam: Until the early 90s, banks were not allowed to invest in the stock market. Harshad, who had connections with the superior officials of banks, offered the banks higher interest rates to transfer the amount directly into his personal account. The banks also issued fake Bank Receipts (BR) on his name. After cunningly drawing capital from banks, he used to invest the enormous amount of money in buying a few selected shares that would consequently increase the price of those shares. This would lure other investors to also invest in those particular shares, which would elevate the price of those shares even higher. After the price of the shares would rise exponentially, he anonymously used to sell off his shares to pocket the huge profit. For instance, in 1991, Harshad invested in the shares of Associated Cement Company (ACC) and took its share price from Rs. 200 to Rs. 9,000 (4,500 percent incline) in barely three months.
The Exposure: A number of people were suspicious about Harshad’s lavish lifestyle; however, it was journalist Sucheta Dalal who went a few steps ahead of others and investigated into the sources through which Harshad accumulated the incredible amount of wealth in a small period. Eventually, on 23 April 1992, the Harshad Mehta Scam started to fall apart after Sucheta broke a story on the unethical methods used by Mehta to manipulate the share prices in a column in The Times of India. She revealed how Harshad Mehta had defrauded Rs. 5 billion from State Bank of India by making an SGL receipt disappear.
Impact of the Scam
On the Stock Market
The scam of 1992 had a huge impact on the capital market and banking system of the country. As the scam was unmasked, the Sensex which stood at 4467 points in January 1992, suddenly crashed to 2529 points in the month of August. It wiped off more than Rs. 1,00,000 crores from the money market.
On the Banking System
After the scam got exposed, banks were left with invalid BR’s and a whopping Rs. 4,000 crores loss. It also contributed to the suicide of the former chairman of Vijaya Bank Mr. B.B Shetty, who had reportedly issued fake cheques to Harshad Mehta.
On the Political Environment
After the scam was exposed, fingers were pointed towards a number of politicians including RBI Governor S. Venkitaramanan, brokers like Pallav Sheth, Ajay Kayan, and industrialists like Aditya Birla. The political environment also heated up when Harshad Mehta held a press conference wherein he claimed to have paid Rs. 1 crore to the then sitting Prime Minister of India P.V. Narasimha Rao to get himself off the scam case.
Arrest, Conviction & Sentence
In November 1992, Harshad Mehta was arrested by the CBI and was charged with 72 criminal offences and more than 600 criminal actions taken by various financial institutions and banks. He hired the famous lawyer Ram Jethmalani and was granted bail after three months.
Again in 1999, Harshad Mehta was convicted in Maruti Udyog Scam by the Bombay High Court and was sentenced to 5 years of imprisonment.
When Mehta was serving his 5-year imprisonment, he complained of chest pain and was taken to a civil hospital in Mumbai, and on 31 December 2001, he died of a heart attack.
Medical Negligence and ‘Group Punishment’ – Claimed by his wife
In July 2022, Harshad Mehta’s wife, Jyoti, launched a website, https://www.harshadmehta.in/, through which she made serious allegations against the jail authorities and the system for medical negligence and ‘group punishment.’ On the website, his wife accused the jail authorities and the police of medical negligence that caused her husband’s death. The website claims,
On that fateful day, the jail authorities neglected his genuine complaint for 4 precious hours after he suffered the first heart attack at around 7 p.m. He immediately reported the unusual pain to his younger brother Sudhir who was in the next cell from where he could hear Harshad but could not see him. The jail Doctors saw him but did not have any medicine for a heart attack. Harshad, therefore, requested them to give him Sorbitrate (medicine) which I had given at the time of his arrest 54 days ago in an emergency kit which was kept in jail custody. Due to his presence of mind, Harshad requested them to give him that Sorbitrate which kept him alive for about 4 hours. Unfortunately, thereafter the jail authorities did not use that golden time of 4 hours to shift him to a hospital which could have saved his life.”
We feel aggrieved that our fundamental and other valuable constitutional and human rights have been suspended and grossly violated for past 30 years and our family is being meted out with a group punishment even though we have not undertaken a single transaction in securities with the banks nor any banks have lodged any claims on us.”
Films & Book Adaption
- The Scam: Who Won, Who Lost, Who Got Away (1993)
- The Scam: From Harshad Mehta to Ketan Parekh (2001)
- Scam 1992: The Harshad Mehta Story is a very popular web series, which can be streamed on SonyLIV and is based on his life.
- The scandal was also depicted in various movies through characters such as Natwar Shah in “Aankhein (1993).”
- The 2006 Indian Hindi-language crime drama film “Gafla” is also said to be inspired by the life of Harshad Mehta.
- Another film “The Big Bull” starring Abhishek Bachchan based on his life, is soon to be released.
- Harshad Mehta was a cricket enthusiast in his childhood.
- Harshad Mehta had 40 rupees in his pocket when he returned to Mumbai in 1973. He rose up from rags and built a fortune worth hundreds of crores.
- Even after getting banned from the stock market, in 1998, Harshad made a comeback as a “stock market guru” by starting his own website, harshadmehta.com, to share his analysis of the stock market and tips for investment.
- Sucheta Dalal, the journalist who exposed Harshad Mehta Scam, was honoured with Padma Shri in Journalism in 2006.