In this article about Harshad Mehta, Harshad Mehta Net Worth ? What is his life? What is the current situation of his family? Come and explore things like this!
Who is Harshad Mehta?
Harshad Mehta was one of India’s most famous stockbrokers. He became known as the main figure who caused a stir across the country due to the 1992 stock market scam (Securities Scam). He amassed a huge fortune by seizing and defrauding stocks.
Once a leading stockbroker in India, Harshad Mehta had many luxurious properties to demonstrate his wealth. His assets mainly included high-end cars including a Toyota Lexus, large houses, and large amounts of money in banks. He lived in a large house in Worli, an upscale residential area of Mumbai.
| Born | 29 July 1954, Bansukkhan, Gujarat |
| Died | 31 December 2001 (age 47), Thakkar Jail, Mumbai |
| Net worth | ₹9,000 crore |
| Charges | 1992 stock market fraud; 72 chargesheets |
| Key document | SEBI’s 1993 investigation report (600 page) |
1992 fraud: Data-driven analysis
The 1992 Harshad Mehta stock market fraud is considered one of the biggest financial frauds in Indian history. It is said that in this fraud, thousands of crores were defrauded by misusing stock market systems. He used the stock market’s mechanisms to manipulate the functioning of the Bombay Stock Exchange in his favor.
How did he misuse the Ready Forward (RF) contract system?
Ready Forward (RF) contracts are a system of buying and selling shares as a temporary loan between banks. This is a legal method used for short-term financial needs. But Harshad Mehta misused it to commit a huge fraud.
Buying shares in the name of banks
He sold his own shares at a high price on the pretext of buying shares for the banks.
Misusing unsuspecting banks
Some banks do not directly engage in stock market transactions. Harshad Mehta misused such banks.
Waiting for the stock market price to rise
Since he bought shares in a huge amount, there was a huge price increase in the stock market in his favor.
Selling shares at a high price and making a profit
- When the shares reached a high price, he sold them back in the market.
Recycling financial fraud
- He continued to follow this method and controlled the stock market.
Major banks & financial institutions affected
The scam affected major banks including State Bank of India (SBI), ANZ Grindlays, Bank of National Bank. It was later discovered that these banks had provided funds to Harshad Mehta without permission.
State Bank of India (SBI)
India’s largest public sector bank was badly affected by this scam.
ANZ Grindlays Bank
This Australian bank played a major role in the Indian financial market.
Bank of National Bank
This bank was one of the major banks that had long-term investments in the stock market in particular.
Journalists who exposed the scam
In 1992, journalists Sucheta Dalal and Deepak Shenoy exposed Harshad Mehta’s scam in the Times of India.
- Sucheta Dalal: On 23 April 1992, Harshad Mehta was the first to report the scam.
- Deepak Shenoy: He has written for the Times of India after examining several documents related to the fraud in the Indian stock market.
Source: SEBI 1993 report, CBI Case No. RC 5(S)/93
Harshad Mehta’s wealth symbols
1.Worli Penthouse: A magnificent mansion
- Harshad Mehta’s magnificent penthouse located in Worli, Mumbai is worth ₹55 crore.
- It had timeless designs, its own private pool, and luxurious rooms.
- After the fraud, the property was seized by the bank and was subject to lawsuits and lawsuits.
2.Toyota Lexus Cars: Luxury Vehicles
- Harshad Mehta owned 6 cars of the Toyota Lexus brand. These were worth ₹2.3 crore.
- Lexus was the symbol of great luxury in India at that time.
- These cars were sold at auction after the stock market fraud came to light.
3.ACC Shares: Huge Investment
- Harshad Mehta owned 1.2 million shares of ACC (Associated Cement Companies) shares.
- Through him, the price of ACC shares suddenly rose. But then it fell.
- After the fraud, SEBI (Securities and Exchange Board of India) seized these shares.
4.Swiss Bank Account: International Financial Balances
- Harshad Mehta had $27 million (foreign exchange) in Swiss banks for his international investments.
- It is said that he had kept the stock market profits for illegal investment abroad..
- The Indian government froze these accounts. Due to this, legal action was taken.
Source: CBI Chargesheet No. 5/93
Technical Fraud: How did it work?
1.Process of buying shares: (Money Laundering Method)
1.1 Misuse of RF (Ready Forward) Agreements
Banks temporarily provide funds to business entities (or shareholders) in a manner called Ready Forward (RF) Agreement. Harshad Mehta misused these agreements to get a large amount of money from banks. Bank Receipts (BRs) were used to confirm the disbursement of money.
1.2 Creation of fake bank receipts
He created fake receipts instead of real bank receipts. Various banks accepted the money by considering these fake receipts as genuine. This money was reinvested in the stock market.
1.3 Fraud in buying shares
The money received from banks was used to buy shares of major companies (mainly ACC – Associated Cement Companies). As the share price was artificially inflated, ordinary investors started buying shares. This further increased the prices.
2.Method of artificially inflating share prices
2.1 Increase in the price of ACC shares
In 1991-92, ACC shares were inflated from ₹200 to ₹9,000. This gave a return of 4,400% per share. The shares of other companies were also artificially inflated through a similar method.
2.2 Increase in Stock Market Trading Volume
The trading volume increased by 600%. There was a lot of investment and sale in the stock market. But the liquidity was only a trick.
3.Performance Indicators – Fraud Measurements
3.1 Huge Daily Profit
In 1992, the Times of India reported that a profit of up to ₹100 crore was made in a single day. Through this, Mehta earned several crores in a few days.
3.2 ROI (Return on Investment) – 10,000% Income
Mehta is said to have earned 10,000% ROI (Return on Investment) on some stocks. This was an artificial market situation that could not have occurred under normal market conditions.
Legal Consequences and Current Status
Harshad Mehta’s 1992 stock market fraud is considered the biggest financial fraud in Indian history. As a result, he was subject to various legal proceedings, prison sentences, and fines.
Important legal proceedings
1999 – Imprisonment (5 years)
In 1999, an Indian court sentenced Harshad Mehta to 5 years in prison. This was given for bank frauds and stock market irregularities. Mehta was booked in 72 separate cases.
2001 – Death (heart disease)
On December 31, 2001, Harshad Mehta died of a heart attack while in a Mumbai jail. While in jail, his family tried to get him released on bail. But the courts refused his bail.
2022 – SEBI recovers ₹1,500 crore
In 2022, the Securities and Exchange Board of India (SEBI) recovered a loan of ₹1,500 crore (INR 15 billion) from the Harshad Mehta family. This amount was repaid to investors affected by Mehta’s fraud.
Mehta Family – Asset Recovery Efforts
Jyoti Mehta (wife) and Adoor Mehta (son) filed several cases in the 2000s to recover seized assets. While some assets were successfully recovered, most were seized by the government and banks.
Current status of the family
After Harshad Mehta’s death, his family has been involved in asset recovery, legal affairs and business activities. Prominent among them are his wife, son and brother.
Jyoti Mehta (wife)
- Jyoti Mehta is currently involved in a case against SEBI in the Supreme Court of India (SC).
- She is pursuing this case to recover assets seized by the government after the 1992 scam.
- She is fighting a legal battle as SEBI and banks are trying to recover more money from her.
Adoor (or Athur) Mehta (son)
- Adoor Mehta is a prominent real estate tycoon in 2023.
- He is estimated to own assets worth ₹120 crore as of 2023.
- He is playing a key role in restoring his family’s financial position.
Ashwin Mehta (brother)
- Ashwin Mehta is currently engaged in business activities in Dubai.
- However, SEBI has barred him from carrying out business activities in India.
- He is under the watch of financial regulators as he is under investigation for his role in the 1992 scam.
Frequently Asked Questions
What is Harshad Mehta net worth?
In 1992, his total wealth was estimated at ₹9,000 crore. This was considered one of the largest private fortunes in India. However, after the scam came to light, most of his assets were seized.
What were the long-term effects of the 1992 scam?
- The Securities and Exchange Board of India (SEBI) was given more powers to regulate the Indian stock market. Stock trading regulations were tightened.
- The National Securities Depository Limited (NSDL) was created. The digital (Demat) method of storing shares rather than keeping them in paper form was introduced.
- The Demat account system was welcomed to trade shares in a systematic manner. This was a major solution to reduce fraud in stocks.
Current wealth of the family
After the scam, the Mehta family suffered a huge loss of wealth. But, they are still rich. They have only 1% of their wealth in 1992. However, with assets worth ₹150-200 crores, they are in good shape.
