History of Mutual Funds in India

1. HISTORY OF MUTUAL FUNDS
The History of Mutual Funds in India starts with the setting up of Unit Trust of India by the
Gov of India in 1963 and the Unit Scheme 1964. Until 1987, UTI enjoyed a monopoly & in
1987, the Government of India permitted public sector banks and the Life Insurance
Corporation of India (LIC) and General Insurance Corporation of India (GIC) to enter the
mutual fund industry. The State Bank of India's SBI Mutual Fund was the first such mutual
fund to be established in 1987. Canara Bank set up Canbank Mutual Fund shortly after in
the same year, followed by funds from Punjab National Bank and Indian Bank in 1989,
Bank of India in 1990 and Bank of Baroda in 1992. The LIC established its mutual fund in
1989 and the GIC in 1990.
Concept: A Mutual Fund is a trust that pools the savings of a number of investors with
common financial goals. The collected money is invested in various instruments like
Shares, Debentures, Bonds, etc depending upon the objectives of the scheme. The income
generated and the capital appreciation is shared by investors in proportion to their share
of their investments, called “units”. Over the last three decades MFs have emerged as
major investment vehicle in view of the distinct advantages over the other forms of
investments especially for those with limited resources.