Mutual Fund History

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The idea of mutual fund began to take shape in India in 1963 with the set up and enactment of Unit Trust of India (UTI) when the UTI Act, 1963 was framed to operate both as a financial institute and an investment trust. In 1964, the board of trustees formulated an openended scheme and launched it with scale of units begin open in the month of July, 1964 at the nominal value of Rs. 10 each. Thus, the UTI came out with its first open-ended scheme in 1964. During the initial phase of the developments of mutual funds between 1964 and 1987, UTI alone managed the show with five open-ended funds.
The first decade of UTI operations (1964-74) was the formative stage. It introduced UnitLinked Insurance plan (ULIP) in 1971. The period 1974-84 witnessed
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The GIC entered in the field of mutual fund business when it brought out two schemes viz., GIC Safe 1991 and GIC Rise 1995. The IDBI floated an offshore mutual fund in 1991. The fund is being managed by subsidiary set up in the joint sector, viz., „Fidelity Internationl‟ – The world‟s largest privately managed investment company. The period 1986-1993 can be termed as the period of Public Sector Mutual Funds (PMFs). From one player in 1985, the number increased to eight in 1993. The public sector as a whole enjoyed monopoly in the industry till 1992 when private players were allowed in the mutual fund industry. The year 1992-93 marked a turning point in the history. From 1987-1993, the mutual fund industry registered almost seven times expansion in terms of assets, rising from Rs. 6700 crore in 1987-88 to Rs. 47000 crore in …show more content…
So as to enhance degree of competitiveness and provide the investors with wider outlets for investments, Dave committee recommended that private sector should also be permitted to sponsor mutual funds through asset management companies. Accordingly, the government permitted entry of private sector in mutual fund business. Mutual Fund Regulations came into being in 1993 and SEBI was empowered to regulate and control all mutual funds except UTI. The first private mutual fund, Kothari Pioneer, was launched in 1993. Credit Capital Finance Corporation, ICICI, Cat Financial Services, Morgan Stanley, Taurus Mutual Fund and Birth Mutual Fund were also allowed to operate in mutual fund business. Interestingly, foreign fund management companies were also permitted to operate in India in association with Indian partners. The private sector mutual funds brought sufficient dynamism in their operations through product innovation, investment management techniques and investor servicing

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