The financial scams that took place in India are known to everyone in this country. How crores of money were involved and lost in the various scams and how the lives of individuals were affected, are the incidents that the people of this country can never forget.
However, if you are interested in knowing about the incidents in detail, you must have searched about all the scandals, and one such scandal you’ll come across is the Ketan Parekh Scam. There are tons of online content that claim the amount involved in this scam was 40,000 cr!
Read this article till the end to reveal the “true” facts about this 40,000 Cr stock market scam.
For what reason was the 2001 stock market scandal exposed as a 40,000 cr scandal?
Ketan Parekh was also known as the ITC Bull of his time for his ability to predict the trading pattern of ITC accurately and consistently. He was a firm believer in the ICE industry during the dot-com boom years of 1999 and 2000. This enabled him to show many more investors that his estimates were accurate.
Various investment firms, foreign corporations, banks, and entrepreneurs entrusted him with their money while Ketan Parekh commanded the stock market from 1999 and 2000.
Since there were no basic rules and regulations, Ketan Parekh traded on the Kolkata stock exchange. He also hired numerous additional brokers to trade on his behalf and pay the commission.
With these large quantities of money, he would buy stakes in some lesser-known companies, causing their share prices to soar and making them the talk of the town overnight. He would sell the shares once the price hit a specified level, reaping huge profits.
He began by acquiring Madhavpura Mercantile Commercial Bank shares to gain the bank's trust when he aimed for a loan in the form of Pay Orders. In March 2001, MMCB issued pay orders of around rupees 137 crores for Ketan’s companies. At that time, the Reserve Bank of India allowed merchants to obtain a credit of about 15 crores.
In 2001, the Reserve Bank of India stepped in and gave the Bank of India the bouncing pay orders back. Due to a lack of funds, Madhavpura Mercantile Cooperative Bank could not process the payments.
MMCB was designated a defaulter by the RBI, costing the bank rupees 137 crores. Only 7 crores of Ketan Parekh's debt were repaid, prompting a 130 crore rupee fraud lawsuit against him.
What are the unknown facts behind the amount involved in the Ketan Parekh Scam?
The events that followed after the interference of RBI are well-known: Ketan was arrested and tried in court. He served time in prison and was prohibited from trading in the Indian Stock Exchange for 14 years.
As the online contents say this was a scam of 40,000 cr, which is completely a baseless statement because during 2001 even the whole stock market’s valuation was not this huge! The biggest stock market scam that India has seen, the Harshad Mehta Scam is itself of 5000 Cr.
Calculating the approximate amount involved, there’s no way for this scam to be anything more than 1000 Cr. Also, there’s no way for any human to conduct this type of scandal single-handedly, The names of government officials, politicians, businessmen and celebrities who were also involved in this scam never came out
Following the court orders and being a reputable resident of this country, only a couple of close ones know how he has reimbursed the greater part of the acquired assets and satisfied his commitments as set by the Supreme Court.
Simultaneously, a couple of transactions are as yet being investigated. Unfortunately, no one was interested in knowing this and hence it remained a lesser-known fact for years. Instead of running away to another country to live a free life, like some high-profile names, he is still working on these corrective measures and is doing what is right.
Society must try to think about the impact of spreading false information and look for the truth instead of spreading rumors that are illogical and incorrect.