Harshad Mehta was a stockbroker in India who became famous for his trading strategies during the late 1980s and early 1990s. Mehta was a convicted fraudster, and his involvement in the 1992 Indian securities scam made him infamous as a market manipulator
Web series Scam 1992 on SonyLIV is based on Harshad Mehta's life, which was inspired from Debashis Basu and Sucheta Dalal’s book ‘The Scam: Who Won, who Lost, who Got Away’. Actor Pratik Gandhi played Harshad Mehta in the show, which became one of the most highly rated TV shows in the world on IMDb
Harshad Mehta used to buy stocks of companies at a low price and then sell them at a higher price to make a profit. He became known as the ‘Big Bull’ due to his aggressive trading style. Mehta later committed one of the biggest stock market scams in the history of India
While there have been several shows and movies like Scam 1992 and The Big Bull on Harshad Mehta, and several characters inspired by him in movies like Aankhein and Gafla, there are many who still do not understand the multi-crore scam that shook the Indian equity markets in the 90s
Business Today asked ChatGPT to simplify the scam and explain it in a way that would be understandable for even 10-year-olds. Here's how OpenAI's ChatGPT has broken down the Harshad Mehta Scam for GenZ
"Harshad Mehta was a man who was good at buying and selling stocks to make money. One day, Mehta discovered a loophole in the banking system. He found out that he could borrow money from banks by showing fake bank receipts," wrote ChatGPT
These fake receipts allowed him to borrow much more money than he was supposed to be able to borrow. Harshad Mehta used the borrowed money to invest in the stock market and made a lot of profit. As Mehta continued to make money, the stock market kept going up, and many people invested their money in the stock market, hoping to make a profit too, ChatGPT explained
"However, this was all a trick. Mehta was using fake receipts to borrow money from banks, and the stock prices of some companies were artificially inflated because of this, ChatGPT explains. Eventually, people found out what Mehta was doing, and the stock market crashed,” ChatGPT further wrote
This market crash led to a lot of people losing their money, and the Indian government had to step in to help the people who had lost their savings. Mehta was caught by the police, and he was charged with several financial crimes, including cheating and forgery. He was eventually sentenced to jail for his actions, ChatGPT further explained
While ChatGPT has explained the whole 1992 scam that led to one of the biggest market crashes in Indian history, it missed out on some technical jargon and banking system terms of the 90s to ensure that GenZ or millennials, who are not familiar with the scam can understand it in a simple manner
The Harshad Mehta scam was a significant event in Indian financial history because it showed that the banking system and stock market needed better regulations to prevent frauds