Scribd
Upload
34 views6 pages

Corp. Finance Sem 2

The document discusses two major financial scams in India - the Harshad Mehta scam of 1992 and the Satyam Computer Services scam of 2009 - and their impact on the economy. The Harshad Mehta scam involved stock market manipulation through illegal banking activities, resulting in a stock market crash that eroded investor confidence. The Satyam Computer Services scam was a large corporate accounting fraud that damaged investor trust in governance. Both scams prompted regulatory reforms to improve transparency and strengthen oversight of financial markets.

Uploaded by

gaurav.cueentertainment
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
34 views6 pages

Corp. Finance Sem 2

The document discusses two major financial scams in India - the Harshad Mehta scam of 1992 and the Satyam Computer Services scam of 2009 - and their impact on the economy. The Harshad Mehta scam involved stock market manipulation through illegal banking activities, resulting in a stock market crash that eroded investor confidence. The Satyam Computer Services scam was a large corporate accounting fraud that damaged investor trust in governance. Both scams prompted regulatory reforms to improve transparency and strengthen oversight of financial markets.

Uploaded by

gaurav.cueentertainment
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 6

GEMS B SCHOOL

PRESENTATION ON

“Financial Scams in India ( Any two examples ) and its impact


on economy”

BY

GAURAV CHATURVEDI

AUG BATCH 1(2022)

CORPORATE FINANCE
Two examples of financial scams in India are the Harshad Mehta scam and the
Satyam Computer Services scam. Let's explore their impact on the economy:

• Harshad Mehta Scam:

The Harshad Mehta scam, also known as the securities scam of 1992, involved
stock market manipulation and illegal banking activities. Harshad Mehta, a
stockbroker, exploited loopholes in the banking system to manipulate stock prices
and carry out large-scale securities fraud. He used funds obtained fraudulently
from banks to drive up stock prices, leading to a speculative bubble in the stock
market.
• Impact on the Economy:

a) Market Instability: The scam resulted in significant market volatility and instability, as the
artificially inflated stock prices crashed after the fraud was uncovered. The Bombay Stock
Exchange (BSE) witnessed a sharp decline in stock prices, eroding investor confidence and
causing financial losses for many.

b) Loss of Investor Trust: The scam exposed flaws in the regulatory system and shattered
investor trust in the stock market. Many individuals and institutional investors suffered
substantial financial losses, leading to a decline in overall investor participation in the stock
market.

c) Reforms and Regulatory Changes: The scam prompted reforms and regulatory changes in the
Indian financial system. The Securities and Exchange Board of India (SEBI) was strengthened,
and measures were taken to enhance transparency, improve market regulations, and prevent
future frauds.
• Satyam Computer Services Scam:

The Satyam Computer Services scam, which emerged in 2009, involved


corporate accounting fraud and manipulation of financial statements by the
top management of Satyam Computer Services, one of India's leading IT
companies. The scam came to light when the company's founder, B. Ramalinga
Raju, confessed to inflating profits, overstating assets, and creating fictitious
bank balances.
Impact on the Economy:
a) Investor Confidence Erosion: The Satyam scam severely damaged investor
confidence in corporate governance and financial reporting standards in India
b) Job Losses and Economic Impact: Satyam Computer Services was a significant
player in the Indian IT sector, employing thousands of people. The scandal resulted in
a severe blow to the company's reputation, leading to client loss, project
cancellations, and ultimately, job losses.
c) Regulatory and Legal Reforms: The Satyam scam prompted a reassessment of
corporate governance practices and accounting standards in India. The government
and regulatory bodies implemented stricter regulations to enhance transparency,
strengthen auditing practices, and hold corporate entities accountable
• Both the Harshad Mehta scam and the Satyam Computer Services scam had a
significant negative impact on the Indian economy. They highlighted the importance
of robust regulations, transparency, and ethical conduct in financial markets and
prompted reforms to strengthen the regulatory framework and restore investor
confidence.

THANK YOU

You might also like