1992 Security Scam
On April 23, 1992, journalist Sucheta Dalal exposed Mehta's illegal methods in a column in The Times of India. Mehta was dipping illegally into the banking system to finance his buying. The authors explain:
“The crucial mechanism through which the scam was effected was the ready forward (RF) deal. The RF is in essence a secured short-term (typically 15-day) loan from one bank to another. Crudely put, the bank lends against government securities just as a pawnbroker lends against jeweller. The borrowing bank actually sells the securities to the lending bank and buys them back at the end of the period of the loan, typically at a slightly higher price.”
It was this ready forward deal that Mehta and his accomplices used with great success to channel money from the banking system.
Read more about this topic: Harshad Mehta
Famous quotes containing the word security:
“Those words freedom and opportunity do not mean a license to climb upwards by pushing other people down. Any paternalistic system that tries to provide for security for everyone from above only calls for an impossible task and a regimentation utterly uncongenial to the spirit of our people.”
—Franklin D. Roosevelt (1882–1945)