The Stock Market Disaster That Shook India
The Geetanjali Gems scandal represents one of the most controversial investment decisions by a state-owned institution. On December 20, 2013, SEBI (Securities and Exchange Board of India) imposed a trading ban on Geetanjali Gems stock, citing serious concerns about Geetanjali Gems market manipulation. Yet, remarkably, LIC (Life Insurance Corporation) chose to invest an additional 50 crores immediately after this regulatory action, escalating its total Geetanjali Gems exposure to approximately 200 crores.
How Geetanjali Gems Collapsed
Mehul Chowksi, the promoter of Geetanjali Gems, faced multiple allegations of fraudulent trading practices. SEBI’s investigation into Geetanjali Gems trading revealed that Mehul Chowkski used front entities to artificially maintain the Geetanjali Gems stock price. The regulatory body discovered coordinated trading activities involving 26 entities connected to manipulate Geetanjali Gems share valuations between July 2011 and January 2012.
By mid-2013, Geetanjali Gems stock had plummeted from Rs 637 to just Rs 85, representing an 86% decline. Despite this dramatic collapse, LIC continued building its Geetanjali Gems position, purchasing shares at progressively lower valuations. By June 2013, the insurer held 4.89% stake in Geetanjali Gems, valued at Rs 202.5 crore.
The Controversial Congressional Connection
According to reports from October 2025, someone from Congress allegedly pressured LIC to bail out Geetanjali Gems, making questionable investment decisions. This assertion suggests political interference in institutional investment choices. The timing of LIC’s aggressive Geetanjali Gems purchases coincided with the stock’s steepest decline, raising eyebrows among market analysts and regulators.
Financial experts question why LIC continued increasing its Geetanjali Gems stake despite clear warning signs. The company’s Geetanjali Gems fundamentals deteriorated rapidly due to mounting debt, liquidity crises, and regulatory scrutiny. Rating agency CARE downgraded Geetanjali Gems in July 2013, citing stressed financial conditions.
Total Collapse and Investor Losses
Today, LIC’s once-substantial 200 crore Geetanjali Gems investment is worth nearly zero. The Geetanjali Gems company entered liquidation proceedings in 2024 with admitted liabilities exceeding Rs 12,558 crore. In February 2024, the National Company Law Tribunal (NCLT) ordered the complete liquidation of Geetanjali Gems after corporate insolvency resolution efforts failed.
The Geetanjali Gems stock suspended trading in 2018 following the PNB scam exposure involving Mehul Chowksi. Subsequent investigations linked Geetanjali Gems to a massive Rs 14,000+ crore Punjab National Bank fraud orchestrated by Nirav Modi and Mehul Chowksi.
Regulatory Failures in Geetanjali Gems Case
Multiple regulatory bodies—SEBI, CBI, and the Income Tax Department—launched investigations into Geetanjali Gems practices. The failure of institutional oversight mechanisms allowed LIC to accumulate massive losses in Geetanjali Gems despite available warning signals.
SEBI later banned Mehul Chowski from securities market trading for 10 years and imposed a Rs 5 crore fine for Geetanjali Gems market manipulation. However, these penalties came too late to prevent LIC’s catastrophic Geetanjali Gems losses.
Lessons from Geetanjali Gems Disaster
The Geetanjali Gems case demonstrates critical gaps in institutional investment governance. Despite clear regulatory warnings about Geetanjali Gems, LIC continued expanding exposure. This pattern suggests possible interference in professional investment decisions, potentially influenced by political considerations rather than market fundamentals.
The Geetanjali Gems collapse serves as a cautionary tale about institutional accountability. Retail investors and taxpayers ultimately bear the burden of these questionable Geetanjali Gems investments, as LIC operates with public funds.
DISCLAIMER BOX
Standard Disclaimer:
This article is presented for educational purposes only and should not be considered financial advice. The information about Geetanjali Gems, Mehul Chowkski, and SEBI regulations is based on publicly available sources and historical records. Investment decisions should be made after thorough research and consultation with qualified financial advisors. Past performance and regulatory actions do not guarantee future outcomes. Readers should conduct independent due diligence before making any investment decisions. This content is created for informational awareness regarding stock market history and regulatory practices.
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