Scams and Scandals - A major part to make market safe

Learning from mistakes is the best quote applied even to stock markets as well as humans. We all have heard about the BIG FAT INDIAN SCAM OF 1992, which not only benefited market broker Harshad Mehta but also the upcoming era of the Indian Stock Market. The partial collapse and disruption in the Bombay Stock Exchange helped to find the biggest loopholes Indian Bank System were having which earned them a hefty load of money.

Takeaways

  1. Mehta allegedly colluded with bank employees to get fake bank receipts(BRs) issued. He used these BRs to get other banks to lend him money under the impression that they were lending against government securities (G-Secs)

  2. He used this amount to juice up the share prices up to 4,400 per cent and sold them.

  3. Till Banks realized that they were in possession of fake BRs holding no value. He was out of their reach in no time. (jab chidiya chug gayi khet)


Conclusion

Basically, scams and scandals are done by strategically minded people but their intentions are nasty which holds them as criminals.

This particular scam helped the Indian stock market to completely renew and organize its financial systems and set a strong online banking module,

There are several scams to give example for , and they will keep happening until humans exists.

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