7 months ago
Harshad Mehta's Scam and India's 1991 Economic Reforms
Harshad Mehta was a famous stockbroker in India during the 1990s.
After India started economic reforms in 1991, many people, including those who had never invested before, put their money into the stock market.
Mehta became very successful and was known as the 'Big Bull' because when he showed interest in a stock, its price would go up.
However, he also did something illegal.
He tricked banks into giving him money using fake documents.
With this money, he artificially increased the prices of certain stocks.
When this was discovered, the stock market crashed, and many people lost their life savings.
Mehta spent the rest of his life fighting legal cases and died in custody in 2001.
This story shows that even when countries open up their economies, they need strong rules and enforcement to prevent fraud.
Harshad Mehta was a prominent stockbroker who exploited India's economic liberalization in 1991 to manipulate the stock market.
He used fake bank receipts to artificially inflate stock prices, leading to a significant market crash in 1992.
The scam amounted to ₹4,000-5,000 crore and wiped out the life savings of many first-time investors.
The Securities and Exchange Board of India (SEBI) had been established but lacked statutory powers until January 1992, contributing to the scam.
Mehta's actions highlighted the need for stronger regulatory frameworks and enforcement in free markets.
- Who
- Harshad Mehta, a stockbroker in India
- What
- A stock market scam involving bank receipts and artificial stock inflation
- Where
- Bombay Stock Exchange (BSE), India
- When
- Exposed in April 1992, with the crash occurring by August 1992
- Why
- To exploit the system and artificially inflate stock prices using phantom capital
Key facts
- Name
- Harshad Mehta
- Born
- 1954
- Died
- 31 December 2001
- Scam Amount
- ₹4,000-5,000 crore
- Sensex Before Scam
- 4,467 points (April 1992)
- Sensex After Scam
- 2,529 points (August 1992)
- SEBI Established
- 1988 (Statutory powers in January 1992)





