History of Mutual Funds in India – Tutorial Part 2

History of Mutual Fund – Mutual Fund was started in Europe at the end of the seventeenth century, but India Mutual Fund was started after independence, in 1963 with the joint efforts of Government of India and RBI (Reserve Bank of India) UTI ( Started with the establishment of Unit Trust of India.

In this way, it has been almost 55 years since the beginning of Mutual Fund in India after 1963, and today in this topic of History of mutual fund, we will talk about how Mutual Fund has developed in this long period of 55 years. are going to understand,

OBJECTIVE OF STARTING MUTUAL FUND

Before knowing the History of Mutual Fund, another question that comes to mind – After all, what was the main reason behind starting Mutual Fund in India by RBI and Government of India?

So friends, the main objective of the Government of India and the RBI behind starting the Mutual Fund was to accelerate the economic development by investing the money of the general public in the stock market investment.

Since the inception of mutual funds, the general public, who have small amounts of money to invest, and the general public has little knowledge and facilities of stock market investment,

With the help of such mutual funds, the general public, whose number is in crores, could collect money in the form of small investments and invest them in the stock market together.

And in this way, where on one hand, the general public got the benefit of stock market investment with the help of MUTUAL FUND, and on the other hand, companies were going to get large amount of capital to grow their business.

And in this way, mutual funds were started in India with the objective of increasing the pace of economic development of India.

HISTORY OF MUTUAL FUND IN INDIA

The history of mutual funds in India can be divided into four parts,

• First part – 1964 to 1987
• Second part – 1987 to 1993
• Part III – 1993 to 2003
• Fourth Part – After 2003

Let us try to understand these four parts in some detail,

Part I – 1963 to 1987 – Establishment and Growth of UTI

Unit Trust of India (UTI), which is India’s first Mutual Fund, was established in the year 1963 by an Act of Parliament.

The first mutual fund scheme by UTI came in the year 1964, which was named Unit Scheme 1964, after this, between 1970 and 1980, UTI started many other schemes for different investors according to their needs,

In which the head was Unit Linked Insurance Plan (ULIP),

It is worth noting that the amount deposited by mutual fund investors with UTI, which in 1984

600 crores, by 1987-88 it had increased more than 10 times to 6700 crores.

Second part – 1987 to 1993, – Entry of public sector bank into mutual fund

Until the year 1987, UTI was the only mutual fund institution in India, but in the same year, the Government of India allowed Public Sector Banks to start mutual fund schemes as well.

And in this way, many different banks and institutions brought mutual fund schemes in mutual funds, among which the most prominent banks and institutions are –

• Insurance Corporation of India (LIC)
• General Insurance Corporation of India (GIC)
• SBI Mutual Fund
• Canbank Mutual Fund (Dec 1987),
• Punjab National Bank Mutual Fund (Aug 1989)
• Indian Bank Mutual Fund (Nov 89)
• Bank of India (June 1990)

In this way, after 1987, the total deposits of investors with different mutual fund institutions had increased from 6700 to 47000 crores by 1993.

Third Part – 1993 to 2003 – Entry of Private Sector of MUTUAL FUND

If we talk about the HISTORY of MUTUAL FUND, then in the year 1993, a new era of Mutual Fund started in India.

Because before this all the mutual institutions were working UNDER UTI, but

SEBI was established in India in 1993, and after the establishment of SEBI, now all the institutions had to follow the rules of SEBI,

MUTUAL FUND REGULATION 1993 was brought by SEBI for the purpose of development and regulation of mutual fund institutions in an organized manner.

And private sector organizations also got permission to bring mutual fund schemes,

This act of 1993 was amended again and later in 1996 the MUTUAL FUND REGULATION 1996 came,

If we talk about the business of mutual fund institutions, then by the end of the year 2003, a total of 33 mutual fund institutions were working, whose business had crossed more than 1 lakh 22 thousand crores.

Fourth Part – After 2003

See Also :   Structure of Mutual Funds in India - Tutorial Part 4

In the year 2003, UTI was divided into two parts, one part which was working UNDER the Government of India, whose total amount was about 30 thousand crores,

And the second part was being run by SBI, PNB, BOB, whose total amount had gone above 76 thousand crores,

And in this way, mutual funds have developed a lot due to the promotion and awareness programs done by mutual fund institutions, and by 2015 the total business of mutual fund institutions has gone above 10 lakh crores,

And the amount of money being invested in India has grown even more rapidly in the last two years,

Friends, in the series of Mutual Fund, today we talked about HISTORY OF MUTUAL FUND IN INDIA, now we will talk in the next part – Benefits of Mutual Fund,