'Had Salary Of Rs 3,000 But Lost Rs 50,000': How NSE CEO Lost 16 Months' Salary In Harshad Mehta Scam
Ashish Kumar Chauhan, CEO of the National Stock Exchange, said he lost Rs 50,000 in the Harshad Mehta scam early in his career, when his monthly salary was just Rs 3,000. Speaking at the NDTV Profit IGNITE Diwali Edition in Mumbai on Friday, he described the loss as a formative lesson in financial discipline and the dangers of excessive leverage.
Chauhan recounted that he was starting his first job in 1991, during India’s balance of payments crisis, when he invested without fully understanding the risks. “It took me a long time to recover and repay the loss,” he said. He advised investors to avoid over-leveraging and trading in instruments they do not comprehend, including derivatives.
“Leverage is the ultimate risk,” Chauhan said. He explained that while companies can access bankruptcy processes in India, individuals have no such protection, leaving them vulnerable for years. He recommended that investors secure basic financial safety first—buying a home, taking insurance, and holding fixed deposits—before committing 5–10% of their net worth to the stock market.
Chauhan’s account underscores how early exposure to financial crisis and personal loss shaped his approach to investing. His experience underscores the importance of financial discipline, risk awareness, and cautious engagement with the stock market.
India’s 1991 balance of payments crisis prompted economic reforms that opened financial markets to private investors. These liberalisation measures created both opportunities and risks for early market participants.
However, the Harshad Mehta scam, a major financial scandal in India in 1992, involved the manipulation of the stock market using fraudulent banking receipts and loopholes in the banking system. Mehta, a stockbroker, diverted funds from banks to artificially inflate stock prices, creating a bubble in the market.
Investors' behaviour today contrasts sharply with that period. Systematic Investment Plans and increased IPO participation show that Indian investors are now engaging with markets cautiously yet confidently.
Chauhan also warned against short-term speculative trading. “Buying in the morning and selling in the afternoon is not investing,” he said. He pointed out that derivatives, though sophisticated instruments he helped introduce to Indian markets, are suitable only for investors who fully understand them.
He highlighted the resilience of Indian investors today, noting that the popularity of systematic investment plans demonstrates enduring trust in capital markets despite past financial scandals.
