What Is The History Of Mutual Funds In India
In India, the saga of mutual funds commenced with the establishment of the Unit Trust of India (UTI) in 1963, under the UTI Act initiated by the Government of India and the Reserve Bank of India. This marked the inception of the mutual fund industry in India. Initially, UTI had a monopoly in the market until 1987, when public sector banks and financial institutions were permitted to set up mutual funds.
The sector was further liberalized in 1993 when private-sector funds were allowed. The regulatory framework was strengthened with the establishment of the Securities and Exchange Board of India (SEBI) in 1992, which took over the regulatory and supervisory role from the Reserve Bank of India in 1993.
SEBI formulated regulations for mutual funds, bringing transparency and accountability to the industry. Over the years, the industry has grown manifold with the entry of numerous domestic and international asset management companies, offering various mutual fund schemes to cater to the diverse needs and risk profiles of Indian investors.
The rise of systematic investment plans (SIPs), digital platforms, and investor awareness programs have further propelled the growth of mutual funds in India, making it a preferred investment avenue for retail investors.
When Did Mutual Funds Start In India
The establishment of the Unit Trust of India (UTI) in 1963, as mandated by the UTI Act of 1963, marks the inception of mutual funds in India. This event signified the commencement of structured mutual fund operations within the nation. The initial stage was distinguished by UTI’s exclusive control over the market, a position it maintained until 1987.
The second phase began with the entry of public sector banks and financial institutions as mutual fund operators, diversifying the market. The third significant phase started in 1993 when the entry of private sector mutual funds was permitted, opening up the market further. This liberalization led to a more competitive and diversified mutual fund market, fostering a culture of investment among the Indian populace.
Over the decades, the industry has seen consistent growth, both in terms of the number of mutual fund houses and the volume of assets managed, marking a long journey since its inception in 1963.
Who Regulates Mutual Funds In India
The regulation of mutual funds in India falls under the purview of the Securities and Exchange Board of India (SEBI), established in 1992. SEBI has the authority to regulate and ensure the smooth functioning of the securities market, which includes mutual funds.
It has laid down a comprehensive regulatory framework to govern mutual fund operations, ensuring transparency, fairness, and protection of investor interests. The regulations set by SEBI cover various aspects of mutual fund operations, including asset management, trustee responsibilities, and investor rights, thus providing a structured and secure environment for investors and operators in the mutual fund sector.
How Many Mutual Funds Are There In India?
As of the latest data, the mutual fund industry in India consists of 44 Asset Management Companies (AMCs) managing a wide range of mutual fund schemes.
The number of schemes and the assets under management continue to grow, reflecting the increasing popularity and trust in mutual funds as a viable investment avenue. The industry offers a diversified range of mutual funds catering to different investor needs and risk profiles.
What Is The Future Of Mutual Funds In India?
The future of Mutual Funds in India looks promising owing to several factors. Firstly, the increasing financial literacy among the masses drives more investments in mutual funds. Secondly, systematic investment plans (SIPs) have become a popular choice, enabling individuals to invest small amounts regularly.
Furthermore, the government and regulatory bodies are taking initiatives to foster a conducive environment for mutual fund investments. Additionally, technological innovations simplify the investment process, making it more accessible to the common man.
Lastly, introducing new and diverse mutual fund schemes is expected to cater to the evolving needs of investors, further propelling the growth of the mutual fund industry in India.
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