The point 1 Sensex 2 crash on March 1, came as a major shock for the Government of India, the stock markets and the investors alike. More so, as the Union budget tabled a day earlier had been acclaimed for its growth initiatives and had prompted a point increase in the Sensex.

This sudden crash in the stock markets prompted the Securities Exchange Board of India SEBI to launch immediate investigations into the volatility of stock markets. SEBI also decided to inspect the books of several brokers who were suspected of triggering the crash. Meanwhile, the Reserve Bank of India RBI ordered some banks to furnish data related to their capital market exposure. This was after media reports appeared regarding a private sector bank 3 having exceeded its prudential norms of capital exposure, thereby contributing to the stock market volatility.

The panic run on the bourses continued and the Bombay Stock Exchange BSE President Anand Rathi's Rathi resignation added to the downfall. Rathi had to resign following allegations that he had used some privileged information, which contributed to the crash.

The scam shook the investor's confidence in the overall functioning of the stock markets. By the end of March , at least eight people were reported to have committed suicide and hundreds of investors were driven to the brink of bankruptcy. The scam opened up the debate over banks funding capital market operations and lending funds against collateral security.

It also raised questions about the validity of dual control of co-operative banks 4.

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Analysts pointed out that RBI was inspecting the accounts once in two years, which created ample scope for violation of rules. The first arrest in the scam was of the noted bull, 5 Ketan Parekh KP , on March 30, , by the Central Bureau of Investigation CBI.

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Soon, reports abounded as to how KP had single handedly caused one of the biggest scams in the history of Indian financial markets. KP's arrest was followed by yet another panic run on the bourses and the Sensex fell by points.

By this time, the scam had become the 'talk of the nation,' with intensive media coverage and unprecedented public outcry. In stock market indices, however, a point is one unit of the composite weighted average on market capitalisation of rupee values.

The daily closing figure of this index broadly reflects the performance of the capital markets. The RBI regulates banking functions while the registrar looks after the managerial and administrative functions.

Home Business Reports Case Studies Books Industry Case Packs Free Resources. The Ketan Parekh Scam. Buy Now Case Code: I don't know how to feed my family. The Crash that Shook the Nation The point 1 Sensex 2 crash on March 1, came as a major shock for the Government of India, the stock markets and the investors alike.