On June 6, 1993, Harshad Mehta claimed he paid ₹1 crore to Prime Minister P. V. Narasimha Rao. This explosive allegation came after Mehta masterminded a ₹4,000 crore stock market scam, shaking India’s financial system. Read the full story.
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Introduction
On 6th June 1993, India woke up to one of the most explosive political and financial revelations in its history. Harshad Mehta, the man already infamous for engineering the ₹4,000 crore securities scam, claimed during a press conference that he had bribed then Prime Minister P. V. Narasimha Rao with ₹1 crore in cash. This jaw-dropping allegation rocked the foundations of Indian politics and finance alike, setting off a chain of investigations, media frenzy, and public outrage.
This article explores the timeline, context, and consequences of that explosive claim and delves into how one man manipulated India’s financial system, shook political institutions, and became a symbol of unbridled greed and systemic failure.
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Who Was Harshad Mehta?
Harshad Shantilal Mehta was born on 29 July 1954 in a middle-class Gujarati Jain family in Paneli Moti, Rajkot, Gujarat. After moving to Mumbai, he pursued a career in stockbroking. By the late 1980s, he became one of the most influential figures in the Bombay Stock Exchange (BSE).
Mehta was hailed as the “Big Bull” of Dalal Street. His charm, confidence, and risk appetite helped him climb to dizzying heights. But behind his glamorous façade was a complex web of illegal financial dealings that would eventually collapse, bringing him—and many others—down with a thud.
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The ₹4,000 Crore Securities Scam
The Modus Operandi
The 1992 securities scam was not a simple stock market manipulation—it was a sophisticated financial fraud exploiting loopholes in the banking system. Here's how it worked:
Banks were required to hold government securities (G-Secs).
Harshad Mehta exploited this by forging Bank Receipts (BRs) from small banks.
He used these BRs to get money from other banks, which was then funneled into the stock market.
Using this cash, Mehta artificially inflated stock prices, creating a bull run.
Stocks like ACC went from ₹200 to ₹9,000 in a matter of months.
When the scam unraveled in April 1992, it exposed not only Mehta’s fraud but also deep-seated corruption and negligence within banks and regulatory bodies like the RBI and SEBI.
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The ₹1 Crore Bombshell: June 6, 1993
Amid multiple investigations, court appearances, and jail stints, Harshad Mehta decided to go public with his most explosive allegation yet.
On June 6, 1993, Mehta held a press conference alongside his lawyer Ram Jethmalani, where he claimed:
> “I gave ₹1 crore in cash to Prime Minister P. V. Narasimha Rao at his official residence.”
Details of the Allegation:
Mehta alleged the cash was delivered in four suitcases to Rao’s residence in New Delhi.
He claimed he did this to stop the harassment and legal pressure he was facing.
Mehta insisted that the bribe was meant to get political protection from ongoing investigations.
The press conference triggered an unprecedented storm. The political opposition, including the Bharatiya Janata Party (BJP) and the Left Front, demanded an inquiry and the resignation of the Prime Minister.
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PM P. V. Narasimha Rao’s Response
The Prime Minister’s Office categorically denied the allegations.
Rao maintained a stoic silence initially but later called the accusations “baseless and false.”
The Congress Party stood firmly behind Rao, dismissing Mehta’s claim as an attempt to divert attention from his own crimes.
No formal investigation directly implicated Rao, and he completed his term as Prime Minister.
Despite the lack of legal consequences for Rao, the damage to public perception was significant. For many, the episode symbolized the nexus between politics and big money.
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Impact on Indian Politics
Harshad Mehta’s bribery allegation came at a time when Indian politics was undergoing major transformation:
The 1991 economic liberalization was still in its early stages.
The Congress government was fragile and depended on outside support.
Scams like this eroded public trust in democratic institutions.
Though no conclusive evidence ever emerged against Rao, this incident further tarnished his legacy, already marred by the Babri Masjid demolition (1992) and other controversies.
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Fallout of the Securities Scam
The scam not only implicated Harshad Mehta but also:
Several top bank officials and public sector bank executives.
Government employees who had turned a blind eye to systemic flaws.
The financial regulatory system, particularly SEBI, which was still toothless at the time.
Consequences:
Mehta was arrested by CBI and spent over three months in jail in 1992.
His stock market license was revoked.
Multiple cases were filed against him under TORTS, CRPC, IPC, and FEMA.
SEBI implemented stricter regulations post-1992.
The Narasimham Committee pushed for banking reforms and transparency.
The scam also triggered mass losses among retail investors, many of whom had blindly followed Mehta’s cues.
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Harshad Mehta’s Death in Custody
On 31 December 2001, Harshad Mehta died at the age of 47 in Thane Civil Hospital due to a heart attack, while still in custody. He left behind:
Multiple pending court cases.
A shattered image.
An unforgettable legacy as India’s most controversial stockbroker.
His death ended the long legal saga, but the questions he raised—about corruption, regulation, and the unchecked power of money—remain relevant.
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Legacy and Cultural Impact
The Harshad Mehta story has lived on through:
The book The Scam: Who Won, Who Lost, Who Got Away by Sucheta Dalal and Debashis Basu, which first exposed the scam.
The SonyLIV web series Scam 1992 (2020), which made Mehta a household name again and revived interest in the story.
Continued discussions about corporate governance and banking loopholes.
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