How did Harshad Mehta, dubbed ‘Big Bull of Dalal Street,’ pull off a scam valued at Rs 4,000 crore? What convinced banks to lend him such an astronomical amount of money?

Scam 2003: The Telgi Scam will be released on September 1, 2023. The series will unfold how Abdul Karim Telgi, the mastermind who perpetrated one of the most infamous yet ingenious financial scams in India, shook the nation. But before streaming this sequel, let us recap the events of Scam 1992: The Harshad Mehta Story(2020), the first series of the franchise.

Scam 1992 revolves around Harshad Mehta—the stockbroker who earned a notorious image for his financial scandals—primarily due to his involvement in the Indian Securities Scam in 1992. The series is based on the novel “The Scam”—by journalists Debashis Basu and Sucheta Dalal. Sucheta was the first journalist who exposed Mehta—which was followed by his arrest—and crash of the Bombay Stock Exchange (BSE), maiming the savings of countless people. Let us delve into the events of the scam that the series covers.

Mehta’s Rising Status In The Bombay Stock Exchange

During the early 1990s—Harshad Mehta—the stockbroker from Bombay became a popular name on Dalal Street—until he was charged in 1992—for the securities scam which abruptly terminated his bull run.

Harshad Mehta was better known as the 'Amitabh Bachchan,' or the 'Big Bull' of the Indian stock market—and he earned the former moniker through his flamboyant lifestyle that he created after emerging as a stockbroker with celebrity-like status.

The Securities Scam of 1992

As recalled by several journalists who covered the crime, Mehta had successfully manipulated stocks by extracting money, through illegal means from many banks using counterfeit bank receipts. He was responsible for developing a vicious circle of fraud—that involved several big financial institutions like the State Bank of India and the National Housing Bank. The estimated worth of the securities scam is about Rs 4,000 crore, and in return, it stimulated transformational alterations in the stock market.

The Aftermath Of the Scam

Between 1991 and 1992, the Sensex skyrocketed from 1,000 points to nearly 4,500 points. During this period, Mehta had deflected thousands of crores extracted from numerous banks into the stock market.

When Sucheta Dalal, a veteran journalist, exposed the scam, it was disclosed to the general public how the Big Bull of Dalal Street had utilized banking loopholes to control stocks. The exposure of the scam immediately generated a bloodbath in the stock market, which greatly damaged Mehta's holdings.

How Harshad Mehta Defrauded the Banks

The downfall of Mehta started creeping in when it was anonymously reported to some journalists that the State Bank of India had INR 500 crore missing from its record in the guise of SGL (Subsidiary General Ledger) at the public debt office of RBI.

This information resulted in a more detailed investigation led by the Janakiraman Committee—a Joint Parliamentary Committee designated by the central bank.

During Mehta’s rise in the 80s, he developed strong connections in the financial and banking system. Like several other brokers, Mehta misused a 'shortcut' provided by the banks to hand out government securities. He served as a broker for several big banks that wanted to trade in government securities. Mehta acted as a mediator between various banks that desired to buy or sell securities.

It is also essential to note that Mehta had close connections with high-ranking officials at the Metropolitan Cooperative Bank and the Bank of Karad, who helped him procure counterfeit bank receipts. Mehta—in turn— used these counterfeit bank receipts to collect money from banks that he redirected to the stock market.

The Arrest and Death

After Sucheta Dalal shed light on the scam, the tax department carried out a raid to examine the alleged claims. The Mehtas were raided on February 28, 1992—and many share certificates and documents were seized.

The CBI conducted a search on June 4, 1992—on the Mehtas. Harshad Mehta was arrested in the same year. He was convicted by the Supreme Court and also the Bombay High Court and charged with 74 criminal offenses. The legal battles continued until 2001 when he succumbed to a cardiac arrest in prison and died at age 47.

This gripping series by Hansal Mehta depicts the systematic financial fraud that involved counterfeit stamp papers and bank receipts in 1992, which eventually crashed the stock market. The shocking scam took the entire nation by surprise. If you haven’t already watched Scam 1992: The Harshad Mehta Story, add this to your watchlist ASAP!