This blog will tell you about the background of the scam of1992 and explains it’s effect on the market and the government regulatory and security system.

BACKGROUND

Harshad Mehta, in 1992 drew off about 1,000 crores through loopholes in the banking system to buy stocks in the Bombay stock exchange. As he was then considered the big bull, many retail investors tried copy his portfolio and the markets, because of his pattern started achieving new heights. But this came to an end after the SBI investigation due to short fall in government securities,which revealed the fact that he almost manipulated 3,500 crores. He was jailed in 1992, and died due to a cardiac arrest in December 2001, while being in the jail.

IMPACT ON THE STOCK MARKET

The immediate effect of the news was a dip in the overall market.The index which was usually around 4500, fell down to…