Chain Roop Bhansali Scam (The CRB Scam) - VRD Nation

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Knowledge
Chain
About Us
Roop Must Read Articles
Bhansali Scam
1. Key Learnings from 70+ Lakhs
(The CRB Profit
Scam) 2. How long does it take to learn

trading
3. How to become full-time

trader- part1

trader- part2
Indian stock market 5. How I invested 1 Crore and

made easy money
had witnessed a lot of
scam till now, and out 6. What is Algo Trading
of them, stood 7. Why 95% of Indian Traders

another big scam Lose Money
worth 1200 crores, 8. Harshad Mehta Scam

executed by a middle
9. Top 5 Books on Technical
class trader and Analysis
Chartered Accountant
10. Rakesh Jhunjhunwala-
Chain Roop BHansali. Inspiring Story
This CRB Scam of
1996 is considered to Get Social
be the biggest Mutual 





Fund Scam India ever
witnessed.


About Chain
Roop Bhansali
Bhansali had his roots

Knowledge About Us
in Sujangarh, Must Read Articles
Rajasthan and later 1. Key Learnings from 70+ Lakhs
moved to Kolkata and Profit
was raised there. 2. How long does it take to learn

trading
He belonged to a
middle class jute trader- part1
trader family. He
completed his trader- part2
Bachelors in
5. How I invested 1 Crore and
Commerce and in the made easy money
year 1980 he
6. What is Algo Trading
completed his
7. Why 95% of Indian Traders
Chartered
Lose Money
Accountancy. During
8. Harshad Mehta Scam
this time of his career
he opened his own 9. Top 5 Books on Technical
Analysis
financial consultancy
firm named CRB 10. Rakesh Jhunjhunwala-
Inspiring Story
Consultancy. He was
quick in getting
Get Social
business opportunities





through his contacts
he had with people in
 different fields. He

used to provide issue
management services
Home to companies
Premium Courses in Special Courses Free Training
Kolkata.
Knowledge About Us Must Read Articles
Over the years,
Bhansali acquired
Profit
other degrees as well
2. How long does it take to learn
including ACS, Ph.D.,
trading
MIIA (US) and a
Diploma in
trader- part1
Journalism. Though
he made a lot of
trader- part2
money, Bhansali
found it difficult to find
made easy money
recognition in Kolkata.
So he moved to New
Delhi to join one of the 7. Why 95% of Indian Traders
Lose Money
country’s leading
registrars of 8. Harshad Mehta Scam
companies. However, 9. Top 5 Books on Technical
when Bhansali was Analysis
caught short-charging 10. Rakesh Jhunjhunwala-

Inspiring Story
the registrar’s clients,
he had to leave.
Get Social
The Scam 




Bhansali established
 ‘CRB Consultants,’ a

private limited
company in New Delhi
Home in 1985Courses
Premium and in 1992,
Special Courses Free Training
the name of the
Knowledge company was
About Us Must Read Articles
changed to CRB
Capital Markets (CRB Profit
Caps) and it was

converted into a trading
public limited 3. How to become full-time

company. He then trader- part1
established CRB 4. How to become full-time

Mutual Fund (Mutual trader- part2
Fund) in 1994 and 5. How I invested 1 Crore and

CRB Share Custodial made easy money
services in 1995. He 6. What is Algo Trading

also established 133
unlisted companies Lose Money
and subsidiaries, and
most of his
transactions were
Analysis
made using these
dummy companies
Inspiring Story
which never existed.
Get Social
Since there was a
boom in the Non- 




Banking Finance
 Company (NBFC)

sector in the 90s, it
acted as a catalyst for
Home the Ponzi

Premium schemes,
Courses Special Courses Free Training
and Bhansali took
Knowledge good advantage
About Us of Must Read Articles
such schemes to
execute his fraud. The Profit
Ponzi schemes were

the fraud schemes trading
that lured investors 3. How to become full-time

and paid profits to trader- part1
earlier investors with 4. How to become full-time

funds collected from trader- part2
the recent investors. 5. How I invested 1 Crore and

The scheme leads made easy money
victims to believe that 6. What is Algo Trading

profits are coming
from genuine Lose Money
business activity, and
they remain unaware
that other investors
Analysis
are the source of
funds for these
Inspiring Story
schemes. And the CR
Bhansali Scam Get Social
became the first ever






Indian scam based on
this type of scheme.


The CRB Capital
Markets offered
Home variousCourses
Premium services Special Courses Free Training
including merchant
Knowledge banking, leasing, hire
and purchase, bill

discounting and Profit
corporate funds
management, fixed trading
deposit and resources 3. How to become full-time

mobilization, mutual trader- part1
funds and asset 4. How to become full-time

management, trader- part2
international finance 5. How I invested 1 Crore and

and forex operations. made easy money
CRB Caps was also 6. What is Algo Trading

very active in stock-
broking, having a card Lose Money
both on the BSE and
the NSE. Chain Roop
Bhansali was in his
Analysis
best phase of
business during the
Inspiring Story
period between 1992
to 1996 where he Get Social
collected money from






the public, through
fixed deposits, bonds

and debentures.

Most of the money
was transferred to the
Home dummyCourses
Premium companiesSpecial Courses Free Training
and subsidiaries
Knowledge which heUs
About created for Must Read Articles
executing the fraud.

His flagship company, Profit
CRB Capital Markets,

raised a record Rs trading
176 crore in three 3. How to become full-time

years. In 1994 the trader- part1
CRB Mutual Funds 4. How to become full-time

launched a closed trader- part2
ended scheme, 5. How I invested 1 Crore and

Arihant Mangal made easy money
Growth Scheme, 6. What is Algo Trading

which was planned to
mature in 1999 and Lose Money
raised Rs 230 crore
from thousands of
investors. Another Rs
Analysis
180 crore came
through fixed
Inspiring Story
deposits. The CRB
Corporation Ltd raised Get Social
Rs 84 core through





three public issues
between May 1993

and December 1995.

And the CRB Share
Custodial Services
Home raised Courses

Premium a further RsSpecial Courses Free Training
100 crore in January
Knowledge 1995 to set
About Us up Must Read Articles
operations.
Profit
Between 1992 and
1995, when the
trading
market was in the
post Harshad Mehta
trader- part1
bear phase, Bhansali
managed to raise
trader- part2
close to Rs 900 crore
and transferred it to
made easy money
his non-existing
companies. No one
ever understood his 7. Why 95% of Indian Traders
Lose Money
intentions as he
always had a good 8. Harshad Mehta Scam
reputation. He was 9. Top 5 Books on Technical
ruling as a financial Analysis
expert during these 10. Rakesh Jhunjhunwala-

Inspiring Story
years and was
collecting huge money
Get Social
from the public
through fixed 




deposits, bonds and

 debentures.

His companies were
rated AAA by CARE
Home and anCourses

Premium upfront cash of Courses
Special Free Training
7 – 10% attracted
Knowledge investors as holders
to Bhansali’s scheme.
He always maintained Profit
a good relationship
with religious leaders trading
and political party 3. How to become full-time

leaders, who favored trader- part1
him bringing investors 4. How to become full-time

and customers. trader- part2

Bhansali used his own
made easy money
money to rig share
prices in order to raise
more money from the 7. Why 95% of Indian Traders
Lose Money
markets. He did that
by buying his own 8. Harshad Mehta Scam
stock through private 9. Top 5 Books on Technical
finance companies Analysis
owned by him. And he 10. Rakesh Jhunjhunwala-

Inspiring Story
also used his other
public companies to
Get Social
buy into each other as
cross-holdings. Both 




the CRB Capital

 Markets and CRB

Share Custodian
Services featured in
Home the list Courses

Premium of top 10 Special Courses Free Training
companies in which
Knowledge CRB Mutual
About Us Funds Must Read Articles
invested in 1994-95.
Profit
To elaborate, the CRB
Share Custodian
trading
invested Rs 15 crore
into CRB Capital
trader- part1
Markets, which in turn
invested Rs 17 crore
trader- part2
in CRB Mutual Funds.
The latter held 24 lakh
made easy money
shares of CRB
Corporation, which
again had a Rs16 7. Why 95% of Indian Traders
Lose Money
crore investment in
CRB Capital Markets. 8. Harshad Mehta Scam

By such activities, Analysis
Bhansali managed to
keep the share prices Inspiring Story
of CRB companies
artificially inflated and Get Social
raised and he was 





able to post profits for
group companies. It

was revealed and

believed that Bhansali
invested in three
Home classesCourses
Premium of companies,
his own privately
Knowledge owned companies,
private companies
owned by his friends Profit
and the board

members of his trading
companies, and many 3. How to become full-time

small companies trader- part1
whose issues were 4. How to become full-time

managed by CRB trader- part2
Capital. Many of these 5. How I invested 1 Crore and

companies were the made easy money
ones Bhansali 6. What is Algo Trading

invested in to
generate paper profits Lose Money
for the group.
Generally, Bhansali 9. Top 5 Books on Technical
bought IPOs of Analysis
companies at a much 10. Rakesh Jhunjhunwala-

Inspiring Story
lower price than the
issue price and hence
Get Social
entered a deal with
the company. As per 




the deals, Bhansali

 sold the holdings at a

higher price,
promising to buy it
Home
back after a year’sSpecial Courses
Premium Courses Free Training
time at higher price.
Knowledge TheAbout
moneyUs generated Must Read Articles
thus was shown as

profits in the books of Profit
CRB Caps or CRB
Corporation as profits trading
from sale of 3. How to become full-time

investment. trader- part1

This procedure was
trader- part2
repeated over and
over again, keeping
made easy money
the books of the
companies artificially
inflated. The huge 7. Why 95% of Indian Traders
Lose Money
profits always helped
him keeping his share 8. Harshad Mehta Scam
price high and also 9. Top 5 Books on Technical
helped him get more Analysis
money from the 10. Rakesh Jhunjhunwala-
public. Since the Inspiring Story
company managed to
Get Social
get higher credit
ratings, it ensured a 




steady fixed deposit

 and bank credit inflow.

These actions and
deeds were made
Home possible
Premium with the help
of Bhansali’s trusted
Knowledge firms of auditors.

During these three
Profit
years, Bhansali’s net
worth of CRB Capital
trading
Markets moved from
Rs 2 crore in 1992 to
trader- part1
Rs 430 crore in 1996.
Surely, this was the
trader- part2
signal for the RBI, but
it did not read it
made easy money
correctly. The RBI
also considered his
application for a bank 7. Why 95% of Indian Traders
Lose Money
licence. It was during
that time, when 8. Harshad Mehta Scam
Bhansali was 9. Top 5 Books on Technical
borrowing in business, Analysis
raising deposits at 10. Rakesh Jhunjhunwala-

Inspiring Story
between 24% and
32% a year, the rates
Get Social
which no legitimate
business can sustain. 




It was very clear and


obvious from his

deeds that Bhansali
wanted a bank
Home
licence. To be issued
Premium Courses Special Courses Free Training
a licence, Bhansali
Knowledge needed
AboutaUscapital of Rs Must Read Articles
100 crore, and the

exercise was aimed at Profit
raising that amount,
whatever it took, trading
including the SBI 3. How to become full-time

fraud. The State Bank trader- part1
of India incident 4. How to become full-time

included that between trader- part2
March 1 and April 9, 5. How I invested 1 Crore and

he duped SBI Mumbai made easy money
branch of Rs 59 crore 6. What is Algo Trading

by issuing fraudulent
dividend warrants and Lose Money
encashing them. He
managed this by
using fake accounts in
Analysis
Chennai, Kolkata and
Rajasthan branch.
Inspiring Story
SBI later accused him
of printing 1800 fake Get Social
dividend warrants and






encashing them.


The Scam
Expose and
Home Aftermath
Knowledge Since Bhansali

About Us was in Must Read Articles
constant pressure to
pay the returns (on Profit
the investor’s
investment) which trading
were not possible with

the high rates, he trader- part1
simply started raising 4. How to become full-time

more money to pay trader- part2
interest on investment 5. How I invested 1 Crore and

and, in some cases, made easy money
the principle by 6. What is Algo Trading

borrowing from the
market. It took a toll Lose Money
on all his financial
institutions when there
was a stock market
Analysis
crash in 1995, and he
swindled nearly an
Inspiring Story
amount of 1200
crores. Get Social
In 1995, it was found 





that only Rs 6 Cr
 came from retail

investors and the rest
amount of 224 Cr was
Home
collected from his Special Courses
dummy companies
Knowledge andAbout
reinvested
Us in the Must Read Articles
same companies’
shares. Since he was Profit
completely trapped
financially and thus in trading
a hurry-burry, he tried 3. How to become full-time

borrowing money from trader- part1
the market, to repay 4. How to become full-time

the interest rate on trader- part2
the amounts he 5. How I invested 1 Crore and

borrowed. He was made easy money
later forced to borrow 6. What is Algo Trading

once again and this
went on and on, and Lose Money
he got stuck in a
financial quicksand.
He was so determined Analysis
to get out of the trap 10. Rakesh Jhunjhunwala-
that he even tried out Inspiring Story
investing in some high

Get Social
risk ventures.
Bhansali was then so 




devastated and
 disturbed that he even

tried financing a Hindi
movie, but the gamble
Home failed. Courses

Premium Special Courses Free Training
The trapped Bhansali,

even tried out
borrowing funds from
Profit
the banks through all
questionable means.
trading
All was going well till
December 1996,
trader- part1
when the Reserve
Bank of India (RBI)
trader- part2
refused banking
status to CRB and
made easy money
contemplated action
for the irregularities in
his business. 7. Why 95% of Indian Traders
Lose Money
Pradip Bhavnani, 8. Harshad Mehta Scam

President of National
Association of Small Analysis
Investors, said:
‘‘There was a lot of Inspiring Story
confusion about how
to act against CRB, Get Social
considering its NBFC 





status. When he
started defaulting,

public sector banks

like the State Bank of
India were the first to
Home
be hit. Had the SEBI
and RBI acted fast,
Knowledge investors wouldn’t
have lost money.’’

Profit
Bhansali was
courageous enough to
trading
escape SEBI’s eye
and claim RBI
trader- part1
clearance for the bank
even after it was
trader- part2
rejected by SEBI. RBI
had no explanation as
made easy money
to how it could have
even considered
issuing an in-principle 7. Why 95% of Indian Traders
Lose Money
licence for a bank to
an unregistered 8. Harshad Mehta Scam
finance company like 9. Top 5 Books on Technical
CRB, when even Analysis
applications by 10. Rakesh Jhunjhunwala-

Inspiring Story
Reliance, Essar and
the AV Birla Group
Get Social
were being rejected.
The collapse of the 




CRB group seemed to

 be a fraud allowed by

supervisors despite
the regulations in
Home place. The

Premium lack
Courses of Special Courses Free Training
clear communication
Knowledge channels between the
banks, RBI and the

government seemed Profit
to have worked to
Bhansali’s advantage trading
to a great extent. 3. How to become full-time

trader- part1
But things could not
hide longer from the
trader- part2
media and it came to
light in 1996 where
made easy money
CRB group was
highlighted for
committing fraudulent 7. Why 95% of Indian Traders
Lose Money
activities, cheating
and siphoning off 8. Harshad Mehta Scam
funds from SBI and 9. Top 5 Books on Technical
others. Hence an FIR Analysis
was filed against 10. Rakesh Jhunjhunwala-

Inspiring Story
Bhansali as per
section 420 of the
Get Social
Indian Penal Court
and section 13(1)D 




and 13(2) of the

 Corruption Act. During

this time he cleverly
transferred investor’s
Home
money and raised Special
Premium Courses
it to Courses Free Training
1200 crores by his
Knowledge fraudulent
About Usschemes. Must Read Articles

He was then banned
Profit
from launching new
schemes. CRB Mutual
trading
Fund was suspended
from doing business.
trader- part1
Plus, an already given
in-principle approval
trader- part2
from RBI to set up a
bank in Bhubaneswar
made easy money
was also withdrawn
after the inspections
revealed the group 7. Why 95% of Indian Traders
Lose Money
was misusing funds.
CRB Group failed and 8. Harshad Mehta Scam
C R Bhansali spent a 9. Top 5 Books on Technical
few months in jail in Analysis
1997. 10. Rakesh Jhunjhunwala-

Inspiring Story
RBI gave Bhansali 72
hours to come up with Get Social
a plan to repay his 





liabilities following
over 400 complaints

from depositors in his

company’s financial
schemes. Most top
Home officialsCourses
Premium of Bhansali
were untraceable. The
Knowledge Central
AboutBureau
Us of Must Read Articles
Investigation (CBI)
locked and sealed the Profit
offices of the CRB

Group and arrested trading
six persons, including 3. How to become full-time

four directors (two trader- part1
from Bikaner and two 4. How to become full-time

from Mumbai) of the trader- part2
satellite companies of 5. How I invested 1 Crore and

the group, a financial made easy money
controller in Mumbai 6. What is Algo Trading

and a relative and
close associate of Lose Money
Bhansali in Delhi. The
CBI also conducted
simultaneous
Analysis
searches at 16 places
in Mumbai, three in
Inspiring Story
New Delhi, one each
in Chennai and Get Social
Ahmedabad and two






places each in
Calcutta, Jhunjunu,


Sujangarh and
Bikaner.

The CBI froze all the
bank accounts of the
group companies and
seized incriminating
Profit
files and other
documents from the
trading
residence of the vice-
president of the CRB
trader- part1
group in Mumbai.
Later rumours were
trader- part2
that Bhansali flew to
Hong Kong with wife,
made easy money
children, parents and
sister.
He was arrested at Lose Money
the Delhi Airport but 8. Harshad Mehta Scam

his family and wife
were allowed to go. . Analysis
RBI then filed a
winding-up petition Inspiring Story
claiming that the
continuance of the Get Social
CRB Group was not in 





the interest of the
public and depositors.

The order prohibited

CRB from selling,
transferring,
Home mortgaging
Premium or
Courses dealing
in any manner with its
Knowledge assets and
About Us from Must Read Articles
accepting public
deposits. Profit

The government later
trading
asked the RBI to
prepare a panel of
trader- part1
auditors asking to
explore the possibility
trader- part2
of making auditing of
NBFCs a prerequisite
made easy money
to registration. The
CBI also registered a
case against few of 7. Why 95% of Indian Traders
Lose Money
the officials of the SBI
who cheated the bank 8. Harshad Mehta Scam
with Bhansali. 9. Top 5 Books on Technical

Analysis
This scam shattered
thousands of Inspiring Story
investors’ dreams,
and led to a loss of Get Social
hard earned investors’ 





money. Around
20,000 investors

finally hoped to get

back some of their
money when the Delhi
Home
high court set up aSpecial
Premium Courses
3- Courses Free Training
member special
Knowledge committee
About Us to ensure Must Read Articles
termination of the
scheme & repayment Profit
to unit holders. Unit

holders of CRB trading
Mutual Fund – Arihant 3. How to become full-time

Mangal Scheme were trader- part1
invited to contact the 4. How to become full-time

Registrar & Transfer trader- part2
Agency with 5. How I invested 1 Crore and

necessary documents made easy money
for redemption of their 6. What is Algo Trading

units. The investors
were paid back at a Lose Money
provisional NAV of Rs.
6.48 per unit almost
20 years after they
Analysis
bought units of the
doomed Arihant
Inspiring Story
Mangal Scheme.
Get Social
In his later years he
shifted to Ghaziabad, 




and became the

 Chairman of Vidya

Bharti School, where
again he was exposed
Home
by the RTI of
dominance and
Knowledge torture toUsthe teachers
About Must Read Articles
and management of
the school. These Profit
kinds of scams
opened the eyes of trading
the investors and the 3. How to become full-time

regulatory authorities. trader- part1
As once mentioned by 4. How to become full-time

Vinod Baid, promoter, trader- part2
Prudential Capital 5. How I invested 1 Crore and

Markets, “Few people made easy money
realize it but the CRB 6. What is Algo Trading

collapse has done a
great deal of good to Lose Money
the country. It has
stopped investors
from seeing ads and
Analysis
feeding money into
the fixed deposit
Inspiring Story
whirlpool”.
Get Social





Chain Roop Bhansali
Scam (The CRB Scam)



Profit

trading

Indian stock market had witnessed trader- part1
a lot of scam till now, and out of 4. How to become full-time

them, stood another big scam worth trader- part2
1200 crores, executed by a middle 5. How I invested 1 Crore and

class trader and Chartered made easy money
Accountant Chain Roop BHansali. 6. What is Algo Trading

This CRB Scam of 1996 is
considered to be the biggest Mutual Lose Money
Fund Scam India ever witnessed. 8. Harshad Mehta Scam
About Chain Roop 9. Top 5 Books on Technical

Analysis
Bhansali 10. Rakesh Jhunjhunwala-
Inspiring Story
Bhansali had his roots in Sujangarh,
Rajasthan and later moved to Get Social
Kolkata and was raised there.






He belonged to a middle class jute

 family. He completed his
trader
Bachelors in Commerce and in the 
year 1980 he completed his
Chartered Accountancy. During this
time of
Home hisPremium
career Courses
he opened Special
his Courses Free Training
own financial consultancy firm
named CRB
Knowledge Consultancy.
About Us He was Must Read Articles
quick in getting business

opportunities through his contacts Profit
he had with people in different
fields. He used to provide issue trading
management services to companies 3. How to become full-time

in Kolkata. trader- part1

Over the years, Bhansali acquired
trader- part2
other degrees as well including
ACS, Ph.D., MIIA (US) and a
made easy money
Diploma in Journalism. Though he
made a lot of money, Bhansali
found it difficult to find recognition in 7. Why 95% of Indian Traders
Lose Money
Kolkata. So he moved to New Delhi
to join one of the country’s leading 8. Harshad Mehta Scam
registrars of companies. However, 9. Top 5 Books on Technical
when Bhansali was caught short- Analysis
charging the registrar’s clients, he 10. Rakesh Jhunjhunwala-
had to leave. Inspiring Story
The Scam Get Social





Bhansali established ‘CRB
Consultants,’ a private limited

company in New Delhi in 1985 and

in 1992, the name of the company
was changed to CRB Capital
Markets (CRB
Home Caps)
Premium and
Courses it was
converted into a public limited
company.
Knowledge He then
Aboutestablished
Us CRB Must Read Articles
Mutual Fund (Mutual Fund) in 1994

and CRB Share Custodial services Profit
in 1995. He also established 133

unlisted companies and trading
subsidiaries, and most of his 3. How to become full-time

transactions were made using these trader- part1
dummy companies which never 4. How to become full-time

existed. trader- part2

Since there was a boom in the Non-
made easy money
Banking Finance Company (NBFC)
sector in the 90s, it acted as a
catalyst for the Ponzi schemes, and 7. Why 95% of Indian Traders
Lose Money
Bhansali took good advantage of
such schemes to execute his fraud. 8. Harshad Mehta Scam
The Ponzi schemes were the fraud 9. Top 5 Books on Technical
schemes that lured investors and Analysis
paid profits to earlier investors with 10. Rakesh Jhunjhunwala-

Inspiring Story
funds collected from the recent
investors. The scheme leads victims
Get Social
to believe that profits are coming
from genuine business activity, and 




they remain unaware that other


investors are the source of funds for

these schemes. And the CR
Bhansali Scam became the first
ever Indian
Home scam Courses
Premium based on this typeCourses
of scheme.
The CRB Capital Markets offered
various services including merchant
Profit
banking, leasing, hire and purchase,
bill discounting and corporate funds
trading
management, fixed deposit and
resources mobilization, mutual
trader- part1
funds and asset management,
international finance and forex
trader- part2
operations. CRB Caps was also
very active in stock-broking, having
made easy money
a card both on the BSE and the
NSE. Chain Roop Bhansali was in
his best phase of business during 7. Why 95% of Indian Traders
Lose Money
the period between 1992 to 1996
where he collected money from the 8. Harshad Mehta Scam
public, through fixed deposits, 9. Top 5 Books on Technical
bonds and debentures. Analysis

Most of the money was transferred Inspiring Story
to the dummy companies and
subsidiaries which he created for Get Social
executing the fraud. His flagship 





company, CRB Capital Markets,
raised a record Rs 176 crore in

three years. In 1994 the CRB

Mutual Funds launched a closed
ended scheme, Arihant Mangal
Growth Scheme,
Home
which wasSpecial Courses
planned to mature in 1999 and
raised Rs
Knowledge 230 About
croreUs
from thousands Must Read Articles
of investors. Another Rs 180 crore

came through fixed deposits. The Profit
CRB Corporation Ltd raised Rs 84
core through three public issues trading
between May 1993 and December 3. How to become full-time

1995. And the CRB Share Custodial trader- part1
Services raised a further Rs 100 4. How to become full-time

crore in January 1995 to set up trader- part2
operations. 5. How I invested 1 Crore and

made easy money
Between 1992 and 1995, when the
market was in the post Harshad
Mehta bear phase, Bhansali 7. Why 95% of Indian Traders
Lose Money
managed to raise close to Rs 900
crore and transferred it to his non- 8. Harshad Mehta Scam
existing companies. No one ever 9. Top 5 Books on Technical
understood his intentions as he Analysis
always had a good reputation. He 10. Rakesh Jhunjhunwala-
was ruling as a financial expert Inspiring Story
during these years and was

Get Social
collecting huge money from the
public through fixed deposits, bonds 




and debentures.


His companies were rated AAA by
CARE and an upfront cash of 7 –
10% attracted
Home
investors as holders
to Bhansali’s scheme. He always
maintained
Knowledge a good
About relationship
Us with Must Read Articles
religious leaders and political party

leaders, who favored him bringing Profit
investors and customers.
trading
Bhansali used his own money to rig
share prices in order to raise more
trader- part1
money from the markets. He did
that by buying his own stock
trader- part2
through private finance companies
owned by him. And he also used his
made easy money
other public companies to buy into
each other as cross-holdings. Both
the CRB Capital Markets and CRB 7. Why 95% of Indian Traders
Lose Money
Share Custodian Services featured
in the list of top 10 companies in 8. Harshad Mehta Scam
which CRB Mutual Funds invested 9. Top 5 Books on Technical
in 1994-95. Analysis

To elaborate, the CRB Share Inspiring Story
Custodian invested Rs 15 crore into
CRB Capital Markets, which in turn Get Social
invested Rs 17 crore in CRB Mutual 





Funds. The latter held 24 lakh
shares of CRB Corporation, which


again had a Rs16 crore investment
in CRB Capital Markets.

By such activities, Bhansali
managed to keep the share prices
of CRB companies artificially
inflated and raised and he was able
Profit
to post profits for group companies.
It was revealed and believed that
trading
Bhansali invested in three classes
of companies, his own privately
trader- part1
owned companies, private
companies owned by his friends
trader- part2
and the board members of his
companies, and many small
made easy money
companies whose issues were
managed by CRB Capital. Many of
these companies were the ones 7. Why 95% of Indian Traders
Lose Money
Bhansali invested in to generate
paper profits for the group. 8. Harshad Mehta Scam

Generally, Bhansali bought IPOs of Analysis
companies at a much lower price
than the issue price and hence Inspiring Story
entered a deal with the company. As
per the deals, Bhansali sold the Get Social
holdings at a higher price, promising 





to buy it back after a year’s time at
higher price. The money generated

thus was shown as profits in the

books of CRB Caps or CRB
Corporation as profits from sale of
investment.
This procedure was repeated over

and over again, keeping the books
of the companies artificially inflated.
Profit
The huge profits always helped him
keeping his share price high and
trading
also helped him get more money
from the public. Since the company
trader- part1
managed to get higher credit
ratings, it ensured a steady fixed
trader- part2
deposit and bank credit inflow.
These actions and deeds were
made easy money
made possible with the help of
Bhansali’s trusted firms of auditors.
During these three years, Bhansali’s Lose Money
net worth of CRB Capital Markets 8. Harshad Mehta Scam

moved from Rs 2 crore in 1992 to
Rs 430 crore in 1996. Surely, this Analysis
was the signal for the RBI, but it did
not read it correctly. The RBI also Inspiring Story
considered his application for a
bank licence. It was during that Get Social
time, when Bhansali was borrowing 





in business, raising deposits at
between 24% and 32% a year, the


rates which no legitimate business
can sustain.

It was very clear and obvious from
his deeds that Bhansali wanted a
bank licence. To be issued a
licence, Bhansali needed a capital 1. Key Learnings from 70+ Lakhs
Profit
of Rs 100 crore, and the exercise
was aimed at raising that amount,
trading
whatever it took, including the SBI
fraud. The State Bank of India
trader- part1
incident included that between
March 1 and April 9, he duped SBI
trader- part2
Mumbai branch of Rs 59 crore by
issuing fraudulent dividend warrants
made easy money
and encashing them. He managed
this by using fake accounts in
Chennai, Kolkata and Rajasthan 7. Why 95% of Indian Traders
Lose Money
branch. SBI later accused him of
printing 1800 fake dividend warrants 8. Harshad Mehta Scam
and encashing them. 9. Top 5 Books on Technical

Analysis
The Scam Expose and 10. Rakesh Jhunjhunwala-
Aftermath Inspiring Story
Since Bhansali was in constant Get Social
pressure to pay the returns (on the






investor’s investment) which were
not possible with the high rates, he

simply started raising more money

to pay interest on investment and, in
some cases, the principle by
borrowingPremium
Home
from the market. ItSpecial
Courses
took aCourses Free Training
toll on all his financial institutions
when there
Knowledge was a stock
About Us market Must Read Articles
crash in 1995, and he swindled

nearly an amount of 1200 crores. Profit

In 1995, it was found that only Rs 6
trading
Cr came from retail investors and
the rest amount of 224 Cr was
trader- part1
collected from his dummy
companies and reinvested in the
trader- part2
same companies’ shares. Since he
was completely trapped financially
made easy money
and thus in a hurry-burry, he tried
borrowing money from the market,
to repay the interest rate on the 7. Why 95% of Indian Traders
Lose Money
amounts he borrowed. He was later
forced to borrow once again and 8. Harshad Mehta Scam
this went on and on, and he got 9. Top 5 Books on Technical
stuck in a financial quicksand. Analysis

He was so determined to get out of Inspiring Story
the trap that he even tried out
investing in some high risk ventures. Get Social
Bhansali was then so devastated 





and disturbed that he even tried
financing a Hindi movie, but the

gamble failed.

The trapped Bhansali, even tried out
borrowing funds from the banks
through
Home allPremium
questionable
Courses means. All Courses
was going well till December 1996,
when the
Knowledge Reserve
AboutBank
Us of India Must Read Articles
(RBI) refused banking status to

CRB and contemplated action for Profit
the irregularities in his business.

trading
Pradip Bhavnani, President of
National Association of Small
trader- part1
Investors, said: ‘‘There was a lot of
confusion about how to act against
trader- part2
CRB, considering its NBFC status.
When he started defaulting, public
made easy money
sector banks like the State Bank of
India were the first to be hit. Had the
SEBI and RBI acted fast, investors 7. Why 95% of Indian Traders
Lose Money
wouldn’t have lost money.’’
Bhansali was courageous enough to
escape SEBI’s eye and claim RBI Analysis
clearance for the bank even after it
was rejected by SEBI. RBI had no Inspiring Story
explanation as to how it could have
even considered issuing an in- Get Social
principle licence for a bank to an 





unregistered finance company like
CRB, when even applications by

Reliance, Essar and the AV Birla

Group were being rejected. The
collapse of the CRB group seemed
to be
Home a fraud allowed
Premium by supervisors
despite the regulations in place. The
lack of clear
Knowledge communication
channels between the banks, RBI

and the government seemed to Profit
have worked to Bhansali’s

advantage to a great extent. trading

But things could not hide longer
trader- part1
from the media and it came to light
in 1996 where CRB group was
trader- part2
highlighted for committing fraudulent
activities, cheating and siphoning off
made easy money
funds from SBI and others. Hence
an FIR was filed against Bhansali as
per section 420 of the Indian Penal 7. Why 95% of Indian Traders
Lose Money
Court and section 13(1)D and 13(2)
of the Corruption Act. During this 8. Harshad Mehta Scam
time he cleverly transferred 9. Top 5 Books on Technical
investor’s money and raised it to Analysis
1200 crores by his fraudulent 10. Rakesh Jhunjhunwala-

Inspiring Story
schemes.
He was then banned from launching Get Social
new schemes. CRB Mutual Fund 





was suspended from doing
business. Plus, an already given in-

principle approval from RBI to set

up a bank in Bhubaneswar was also
withdrawn after the inspections
revealed the
Home
group was misusing
funds. CRB Group failed and C R
Bhansali spentAbout
Knowledge a fewUsmonths in jail Must Read Articles
in 1997.
Profit
RBI gave Bhansali 72 hours to
come up with a plan to repay his
trading
liabilities following over 400
complaints from depositors in his
trader- part1
company’s financial schemes. Most
top officials of Bhansali were
trader- part2
untraceable. The Central Bureau of
Investigation (CBI) locked and
made easy money
sealed the offices of the CRB Group
and arrested six persons, including
four directors (two from Bikaner and 7. Why 95% of Indian Traders
Lose Money
two from Mumbai) of the satellite
companies of the group, a financial 8. Harshad Mehta Scam
controller in Mumbai and a relative 9. Top 5 Books on Technical
and close associate of Bhansali in Analysis
Delhi. The CBI also conducted 10. Rakesh Jhunjhunwala-
simultaneous searches at 16 places Inspiring Story
in Mumbai, three in New Delhi, one

Get Social
each in Chennai and Ahmedabad
and two places each in Calcutta, 




Jhunjunu, Sujangarh and Bikaner.



The CBI froze all the bank accounts
of the group companies and seized
incriminating
Home
files and other
documents from the residence of
the vice-president
Knowledge Aboutof
Usthe CRB group Must Read Articles
in Mumbai. Later rumours were that

Bhansali flew to Hong Kong with Profit
wife, children, parents and sister.
trading
He was arrested at the Delhi Airport
but his family and wife were allowed
trader- part1
to go. . RBI then filed a winding-up
petition claiming that the
trader- part2
continuance of the CRB Group was
not in the interest of the public and
made easy money
depositors. The order prohibited
CRB from selling, transferring,
mortgaging or dealing in any 7. Why 95% of Indian Traders
Lose Money
manner with its assets and from
accepting public deposits. 8. Harshad Mehta Scam

The government later asked the RBI Analysis
to prepare a panel of auditors
asking to explore the possibility of Inspiring Story
making auditing of NBFCs a
prerequisite to registration. The CBI Get Social
also registered a case against few 





of the officials of the SBI who
cheated the bank with Bhansali.


This scam shattered thousands of
investors’ dreams, and led to a loss
of hard
Home earned investors’
Premium Courses money.
Around 20,000 investors finally
hoped to get back
Knowledge Aboutsome
Us of their Must Read Articles
money when the Delhi high court

set up a 3-member special Profit
committee to ensure termination of

the scheme & repayment to unit trading
holders. Unit holders of CRB Mutual 3. How to become full-time

Fund – Arihant Mangal Scheme trader- part1
were invited to contact the Registrar 4. How to become full-time

& Transfer Agency with necessary trader- part2
documents for redemption of their 5. How I invested 1 Crore and

units. The investors were paid back made easy money
at a provisional NAV of Rs. 6.48 per 6. What is Algo Trading

unit almost 20 years after they
bought units of the doomed Arihant Lose Money
Mangal Scheme.
In his later years he shifted to 9. Top 5 Books on Technical
Ghaziabad, and became the Analysis
Chairman of Vidya Bharti School, 10. Rakesh Jhunjhunwala-

Inspiring Story
where again he was exposed by the
RTI of dominance and torture to the
Get Social
teachers and management of the
school. These kinds of scams 




opened the eyes of the investors

 the regulatory authorities. As
and

once mentioned by Vinod Baid,
promoter, Prudential Capital
Markets, “Few
Home people
Premium realizeSpecial
Courses it but Courses Free Training
the CRB collapse has done a great
deal of good toAbout
Knowledge the country.
Us It has Must Read Articles
stopped investors from seeing ads

and feeding money into the fixed Profit
deposit whirlpool”.
trading

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Home Premium Courses Special Courses Free Training

Scam) 2. How long does it take to learn

3. How to become full-time

4. How to become full-time

Indian stock market 5. How I invested 1 Crore and

of them, stood 7. Why 95% of Indian Traders

worth 1200 crores, 8. Harshad Mehta Scam

be the biggest Mutual 

Bhansali had his roots

Rajasthan and later 1. Key Learnings from 70+ Lakhs

moved to Kolkata and Profit

was raised there. 2. How long does it take to learn

companies. However, 9. Top 5 Books on Technical

when Bhansali was Analysis

caught short-charging 10. Rakesh Jhunjhunwala-

Caps) and it was

public limited 3. How to become full-time

established CRB 4. How to become full-time

Fund) in 1994 and 5. How I invested 1 Crore and

services in 1995. He 6. What is Algo Trading

Home the Ponzi

Ponzi schemes were

that lured investors 3. How to become full-time

earlier investors with 4. How to become full-time

the recent investors. 5. How I invested 1 Crore and

victims to believe that 6. What is Algo Trading

became the first ever

and purchase, bill

deposit and resources 3. How to become full-time

funds and asset 4. How to become full-time

international finance 5. How I invested 1 Crore and

CRB Caps was also 6. What is Algo Trading

collected money from

executing the fraud.

CRB Capital Markets,

176 crore in three 3. How to become full-time

CRB Mutual Funds 4. How to become full-time

ended scheme, 5. How I invested 1 Crore and

Growth Scheme, 6. What is Algo Trading

Home raised Courses

reputation. He was 9. Top 5 Books on Technical

ruling as a financial Analysis

expert during these 10. Rakesh Jhunjhunwala-

deposits, bonds and

Home and anCourses

and political party 3. How to become full-time

him bringing investors 4. How to become full-time

5. How I invested 1 Crore and

stock through private 9. Top 5 Books on Technical

finance companies Analysis

owned by him. And he 10. Rakesh Jhunjhunwala-

the CRB Capital

Home the list Courses

9. Top 5 Books on Technical

raised and he was 

and the board

companies, and many 3. How to become full-time

whose issues were 4. How to become full-time

Capital. Many of these 5. How I invested 1 Crore and

ones Bhansali 6. What is Algo Trading

Generally, Bhansali 9. Top 5 Books on Technical

bought IPOs of Analysis

companies at a much 10. Rakesh Jhunjhunwala-

the deals, Bhansali