when mutual fund started in India?
Mutual fund is an investment vehicle that pools resources of multiple investors to achieve a common goal. Mutual funds are often marketed as a way to achieve higher returns than those available from individual stocks. Mutual funds were first introduced to India in the early 1990s. At that time, only a few mutual funds were available in the country. Over the past decade, the number of mutual funds has increased significantly, and now there are more than 1,000 mutual funds available in India.
1. when Mutual fund started in India? A Brief History
The first mutual fund in India was established in 1963 by the Unit Trust of India (UTI), at the initiative of the Government of India and Reserve Bank of India. The UTI was set up as a trust under the Indian Trusts Act, 1882, with the objective of promoting the development of the capital market in India.
The UTI started with a capital of Rs. 5 crores and its first scheme was launched in 1964 with a focus on investing in government securities. Over the years, the UTI has grown in size and today it manage assets worth over Rs. 1 lakh crore.
The Unit Trust of India was restructured in 2003 and split into two entities – the UTI Mutual Fund and the UTI Asset Management Company. The UTI Mutual Fund is managed by the UTI Asset Management Company.
The mutual fund industry in India has come a long way since 1963 and today there are over 50 asset management companies managing assets worth over Rs. 10 lakh crore.
2. The Beginnings – Pre-1991
In India, the first mutual fund was established in 1963 by the Unit Trust of India (UTI). However, it was only in 1987 that the mutual fund industry began to take shape with the launch of public sector mutual funds. Prior to 1991, there were only a handful of mutual fund companies in India.
The mutual fund industry in India started taking off only after the 1991 liberalization, when the Securities and Exchange Board of India (SEBI) was established. The SEBI Act of 1992 gave the regulator statutory powers and the mutual fund industry started booming. In the last 28 years, the industry has grown exponentially and there are now over 50 mutual fund companies in India with assets under management (AUM) of Rs. 26 lakh crore (as of March 2020).
The growth of the mutual fund industry in India can be attributed to a number of factors. Firstly, the Indian economy has been growing at a healthy pace over the last few years. This has led to an increase in the number of people with investable surplus. Secondly, with the increasing penetration of financial services, more and more people are aware of investment options like mutual funds. Thirdly, the introduction of new investment products like equity-linked saving schemes (ELSS) and systematic investment plans (SIPs) has made investing in mutual funds more attractive.
Looking ahead, the mutual fund industry is expected to continue growing at a healthy pace. With the government’s push for financial inclusion and the increasing awareness about investment options, it is estimated that the AUM of mutual funds will reach Rs. 100 lakh crore by 2025.
3. The Growth Years – Post-1991
The Indian mutual fund industry has come a long way since its humble beginnings in 1963. The industry has grown exponentially in recent years, with assets under management (AUM) reaching Rs 23.4 lakh crore (US$ 3.29 trillion) in March 2019.
The industry has undergone three major phases of growth:
1) The Pre-1991 Phase: The industry was largely unknown and undeveloped during this period. There were only a handful of mutual fund schemes and AUM was a mere Rs. 172 crore (US$ 24.3 million).
2) The Post-1991 Phase: This was the era of liberalization, privatization and globalization (LPG). The industry started to grow rapidly, with AUM increasing to Rs. 1,00,000 crore (US$ 14.1 billion) by March 2003.
3) The Post-2003 Phase: The industry has continued to grow at a rapid pace, with AUM reaching Rs. 23.4 lakh crore (US$ 3.29 trillion) in March 2019.
The Indian mutual fund industry is now the tenth largest in the world and is expected to continue to grow at a rapid pace in the years to come.
4. The Present and Future of Mutual Funds in India
The mutual fund industry in India started in 1963 with the establishment of Unit Trust of India (UTI). UTI was established by an Act of Parliament and was under the regulatory and administrative control of the Reserve Bank of India (RBI) and the Government of India. In 1978, the Government of India allowed public sector banks and life insurance companies to set up mutual funds. In 1987, the Securities and Exchange Board of India (SEBI) was established as the regulator for the securities market in India. SEBI introduced a number of reforms in the mutual fund industry which facilitated the growth of the industry.
when mutual fund started in India? The mutual fund industry in India has grown significantly in the last two decades. The total assets under management (AUM) of the industry increased from Rs. 44 billion in 1993 to Rs. 7,32 billion in 2003. The industry witnessed a growth of 34% in 2004-05 and the AUM increased to Rs. 9,84 billion. In the last decade, the industry has grown at a compound annual growth rate (CAGR) of 19%. The industry had an AUM of Rs. 17,664 billion as on March 31, 2015.
The growth of the mutual fund industry can be attributed to a number of factors. Firstly, the economic reforms undertaken by the government in the early 1990s led to a liberalization of the financial sector which facilitated the entry of private players in the mutual fund industry. Secondly, the SEBI introduced a number of reforms which made investing in mutual funds more attractive for investors. Thirdly, the growth of the capital markets and the increasing awareness of investors about the benefits of investing in mutual funds also contributed to the growth of the industry.