Early nineties. Harshad Mehta scam.
The best photo is of Harshad Mehta in 1991 together with his Lexus as well as the photo below it is that of the same person but staying escorted by simply police in 1992 to get fraud.
Mr Mehta, nicknamed Big Bull, was a showy stock broker of Mumbai who flower to instant fame in 1991 due to his aggressive strategies of stock market. This individual bought a Tuning, a sprawling house with swimming pool and a course!! But not many knew regarding his fraudulent methods. This individual exploited every possible loophole in banking devices to make quick money illegitimately. Two these kinds of loopholes were Ready Forwards (RF) and Bank Invoices (BR). I want to try to explain in simple words how he exploited the system.
At any time of time, there would be banks planning to sell their very own securities (like bonds/shares) intended for cash and there would be banks wanting to get securities by offering cash. He used to become a middleman between this sort of banks. Suppose SBI wanted to sell investments and ICICI wanted to buy securities. He'd go to SBI and assure them that he will locate a buyer, have their securities and ask pertaining to 1 week coming back this process.
In that case, immediately, this individual wil go to ICICI and tell them that he will look for a seller and take all their cash and enquire for 1 week time. Accomplishing this way, this individual ended up having both the securities and liquid cash for 1 week (which was unlawful but banking institutions did that as they had gained their trust). Since he would deal with multiple banks, he would tell SBI that he may pay in Monday, after that go to Canara bank and say he can pay all of them on tuesday and so on. It was such a sophisticated pipeline procedure, the next Monday when he was supposed to shell out to SBI, he would help to make a deal with IDBI, obtain their money and pay it to SBI, therefore getting a breathing time of one other week and the cycle would continue. Phew!! This was the Ready Forward loophole.
The next loophole he picked was your Bank Receipt. In the over example, you saw how one bank would give investments and another would...