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The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India. Significant growth in size of mutual fund industry was seen in late 1980’s when public sector mutual funds were given permission. The entry of private sector players in mid 1990s and formulation of comprehensive SEBI MF Regulations 1996 led to sharp growth in the assets of the mutual fund industry. In the last ten years, entry of banks and institutional players as intermediaries coupled with greater investor awareness and penetration has led to significant growth in assets of Indian Mutual Fund industry.
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Indian Mutual Fund Industry
The significant growth in assets of Indian Mutual Fund
industry
The growth of mutual funds in India can be
broadly tracked in terms of four distinct phases
First Phase (1964-1987)Second Phase (1987-1993)
Third Phase (1993-2003)Fourth Phase (2003-till date)
First Phase (1964-1987) Unit Trust of India (UTI) was
established in 1963 by an Act of Parliament
The first scheme launched by UTI was Unit Scheme 1964
At the end of 1988 UTI had Rs.6,700 crores of assets under management
Second Phase (1987-1993) This phase showed the entry of Public Sector
Funds
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by banks
LIC and GIC established their mutual funds in June 1989 and December 1990 respectively
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores
Third Phase (1993-2003) The Private Sector Funds entered the Indian mutual
fund industry in 1993
According to Mutual Fund Regulations all mutual funds except UTI were to be registered
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993
By 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores, whereas the Unit Trust of India had assets of Rs.44,541 crores, staying as the largest mutual fund in this phase
Fourth Phase (2003-till date) In 2003, UTI was bifurcated into two separate
entities – • Specified Undertaking of UTI - representing the assets of US 64 scheme• UTI Mutual Fund Ltd - sponsored by the Public Sectors
Consistency in performance by top mutual funds and other major factors has contributed to growth in mutual fund assets
At the end of December 2012, the average assets of Indian mutual fund industry amounted to Rs 7,86,543 crores
Growth of Assets Under Management
Conclusion Asset Under Management of the Indian Mutual Funds
Industry, if compared, constitute less than 11% of the total deposits held by the Indian banking industry, less than SBI alone.
Reason of its poor growth is that the mutual fund industry in India is new here. Large sections of Indian investors are yet to be intellectuated with the concept.
Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.
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