The Harshad Mehta scam, also known as the securities scam, was one of India’s biggest financial scandals, unfolding in the early 1990s. Harshad Mehta, a stockbroker, exploited loopholes in the banking system to illegally obtain massive amounts of money. He used these funds to artificially inflate stock prices on the Bombay Stock Exchange, creating a bull run that attracted many investors.

Mehta’s strategy involved using fake bank receipts to secure loans from banks, which he then pumped into the stock market. This drove up the prices of certain shares, and when Mehta sold these shares at inflated prices, he made a substantial profit. However, when the scam was uncovered, the market crashed, and many investors, including banks, faced huge losses.

The scam, estimated at ₹4,000 crores (approximately $1 billion at the time), exposed significant flaws in the Indian banking system and stock market regulations. It led to the collapse of several banks and a re-evaluation of India’s financial regulatory framework. The scandal also tarnished the reputation of the Indian stock market, leading to a loss of confidence among investors.