Bots, trusted
7,437
edits
Cleanup: Information added.
(robot: Creating/updating articles) |
WikiDwarfBOT (talk | contribs) (Cleanup: Information added.) |
||
| Line 1: | Line 1: | ||
{{Short description|Indian stockbroker and businessman (1954–2001)}} | {{Short description|Indian stockbroker and businessman (1954–2001)}} | ||
{{EngvarB|date=May 2014}} | {{EngvarB|date=May 2014}} | ||
{{Use dmy dates|date=May 2021}} | {{Use dmy dates|date=May 2021}} | ||
| Line 39: | Line 39: | ||
==Background of the 1992 security fraud== | ==Background of the 1992 security fraud== | ||
=== | === Bank funds scam === | ||
Up to the early 90's banks in India were not allowed to invest in the equity markets. However, they were expected to post profits and to retain a certain ratio (threshold) of their assets in government fixed interest bonds. Mehta cleverly squeezed capital out of the banking system to address this requirement of banks and pumped this money into the share market. He also promised the banks higher rates of interest, while asking them to transfer the money into his personal account, under the guise of buying securities for them from other banks. At that time, a bank had to go through a broker to buy securities and forward bonds from other banks. Mehta used this money temporarily in his account to buy shares, thus hiking up demand of certain shares (of good established companies like [[Associated Cement Companies|ACC]], [[Sterlite Industries]] and [[Videocon]]) dramatically, selling them off, passing on a part of the proceeds to the bank and kept the rest for himself. This resulted in stocks like ACC (which was trading in 1991 for ₹200/share) skyrocketing to nearly ₹9,000 in just 3 months.<ref name="dalal"/> | Up to the early 90's banks in India were not allowed to invest in the equity markets. However, they were expected to post profits and to retain a certain ratio (threshold) of their assets in government fixed interest bonds. Mehta cleverly squeezed capital out of the banking system to address this requirement of banks and pumped this money into the share market. He also promised the banks higher rates of interest, while asking them to transfer the money into his personal account, under the guise of buying securities for them from other banks. At that time, a bank had to go through a broker to buy securities and forward bonds from other banks. Mehta used this money temporarily in his account to buy shares, thus hiking up demand of certain shares (of good established companies like [[Associated Cement Companies|ACC]], [[Sterlite Industries]] and [[Videocon]]) dramatically, selling them off, passing on a part of the proceeds to the bank and kept the rest for himself. This resulted in stocks like ACC (which was trading in 1991 for ₹200/share) skyrocketing to nearly ₹9,000 in just 3 months.<ref name="dalal"/> | ||