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The 1992 scam and the changes in the Security System of India
The 1992 scam was the biggest stock market scam ever committed in the Indian Stock Market. The main perpetrator of the scam was a well known stock broker Harshad Mehta. The 1992 scam was a systematic stock fraud using bank receipts and stamp paper which caused the Indian Stock market to crash. The scam lead to a complete structural change of the security system of India and introduced a completely new system of stock transactions. The 1992 scam exposed the Indian financial systems through the inherent loopholes of the system. This scam led to the reform of the security system of India and introduced online security systems.

The 1992 Scam
Securities scam refers to the idea of diversion of funds from the banking system to various stockholders or brokers. The 1992 scam in the security system of India was a systematic fraud committed by Harshad Mehta in the Indian stock market which made the entire securities system collapse. Mehta allegedly committed a fraud of over 1000 crores from banking system to buy stocks on the Bombay Stock Exchange. The scam impacted the entire exchange system as the securities system collapsed and investors lost thousands of rupees in the exchange system. The scope of the scam was so large that the net value of the stocks was higher than the health budget and education budget of India. The scam was orchestrated in such a way that Mehta secured securities from the State Bank of India but got its officials to issue cheques to him and failed to deliver the securities. Mehta made the prices of the stocks soar high through fictitious practices and would go on to sell the stocks that he owned in these companies. The impact of the scam had many consequences which included the loss of money to lakhs of families but more importantly the immediate impact of the scam was a sharp fall in the share prices. The index fell from 4500 to 2500 representing a loss of Rs. 100,000 crores in market capitalization. This rapid fall was the largest the stock market had ever seen. The 1992 scam raise many questions which involved many bank officials responsible for collusion with Mehta. In an interview with Montek Singh Ahluwalia(secretary, economic affairs at the Ministry of Finance), he said that there was involvement of many top bank officials.

The Impact of the 1992 Scam
The immediate impact of the scam was a fall in share prices and the biggest plunge in the index the market had ever seen. The scam cause the breakdown of the control system both within the commercial banks as well as the fundamental system of the RBI. The scam opened the inherent issues within the securities system of India. The scam just resulted in withdrawal of about Rs. 3,500 crore from the market, which for a market of the size of Rs. 250,000 crore which seems to be a small amount in terms of the market prize, however, the scam resulted in a majority collapse of many stock market shares. This was due to the fact that the BSE resorted to tampering within the records in the trading system. The majority Indian stock market is based on emotions rather than quantitative analysis and as the scam came to light, many investors withdrew their capital from the market. This caused a demand and supply collapse of the prices and quantity which caused the entire system to be affected due to the 1992 scam. As the scam came to light, many banks were impacted as the news of the scam spread through the financial markets around the world. Several foreign banks like Standard Chartered and ANZ Grindlays, were implicated in the scam. Standard chartered was accused of the bank receipt scam as they issued receipts to Mehta while ANZ Grindlays was accused of pumping money into Mehta's personal account. Therefore, the private sector was the main participant in the market for the Bank Receipts Scam. The government realized that the fundamental problem with the financial structure of the stock markets was the lack of computerized systems which impacted the whole stock market.

Impact on the criminal system
The 1992 scam caused an investigation through which many officials were implicated on fraudulent charges. The five main accused officials were related to the Financial Fairgrowth Services Limited (FFSL) and Andhra Bank Financial Services Ltd (ABFSL). The chairman of Vijaya Bank committed suicide following the outbreak of news about the bank receipt scam. The scam also led to the resignation of P. Chidambaram who was accused of owning shell companies related to Mehta. Mehta was convicted by the Bombay High Court and the Supreme Court of India for his part in this financial scandal valued at Rs. 49.99 billion (USD $ 740 million). There were many arrests that were made which exposed several bank officials and led to complete breakdown on many banking systems

Reform in the security system of India after the 1992 scam
The security system of India took a rapid reform in its fundamental structure post the 1992 scam. The first major structural change was the formation of the National Stock Exchange of India(NSE). The first major reform in the financial sector of India was the formation of CII Code for Desirable Corporate Governance developed by Rahul Bajaj. The formation of this code paved way for two major committees headed by Kumar Mangalam Birla and N. R. Narayana Murthy which was overlooked by the Securities and Exchange Board of India. These committees were formed to look after corporate governance as the 1992 scam was based on the principles of corporate governance. Post 1992, a new regulatory board known as the Securities and Exchanges Board of India was formed to monitor the National Stock Exchange and the National Securities Depository. There were structural changes in the equity market. The government introduced ten acts of parliament and one constitutional amendment based upon the principles of economic reform and legislative change for the equity market. The NSE introduced online trading in 1994 which chnaged the dynamics of stock buying and selling. The capital market now opened up nationally as opposed to being confined in Mumbai. The exchange system started functioning based on satellite communications that abolished geographical barriers.