Mutual funds have changed how people in India save and invest their money. They offer a way to grow wealth and feel more secure financially. This is the story of how they started and how they’ve grown.
📜 History of Mutual Funds in India
📌 Part 1: When Mutual Funds First Came to India (1963 – 1987)
The story begins in 1963. The Indian government and the Reserve Bank of India (RBI) created a company called the Unit Trust of India (UTI). Their goal was to make it easier for regular people, even those with small amounts of money, to invest in stocks and bonds.
📅 1964: UTI launched its first investment plan, US-64. It became very popular among everyday investors. This plan offered a fixed return, meaning investors knew how much money they would get back, making it safe for people who didn’t like risk.
📅 For many years, in the 1970s and 1980s, UTI was the only company selling mutual funds. However, they created other plans, including Mastershare in 1986. Mastershare was vital because it was the first plan to focus on investing in company stocks (equities), which was designed to help people’s money grow faster.
➡️ During this time, UTI was like a government-run store. There was no other place to buy mutual funds, so there was no competition. This limited the industry’s growth and people’s choices.
📌 Part 2: More Government Companies Start Selling Mutual Funds (1987 – 1993)
As more people wanted to invest, the government allowed other government-owned banks and financial companies to sell mutual funds, giving people more options.
📅 1987: Other government companies started offering mutual funds, including:
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- State Bank of India Mutual Fund
- Canara Robeco Mutual Fund
- Punjab National Bank Mutual Fund
- LIC Mutual Fund
- GIC Mutual Fund
➡️ Although people now have more choices about where to invest, the government still manages most mutual funds.
📌 Part 3: Private Companies Enter the Market (1993 – 2003)
In the 1990s, India changed its economic rules to allow private companies to do business more freely. This allowed private companies to start selling mutual funds. The Securities and Exchange Board of India (SEBI) created new rules to protect investors.
📅 1993: SEBI made detailed rules for mutual funds. These rules ensured fairness and transparency and protected people’s money.
📅 1993 – 1996: Private companies like Kothari Pioneer, Franklin Templeton, and ICICI Prudential started selling mutual funds, bringing new ideas and investment strategies to the market.
📅 1996: SEBI made it mandatory for most mutual fund companies to register with them. This was to ensure that companies followed the rules and were accountable.
📅 2002: The government split UTI into two parts: one that followed SEBI’s rules and another still under government control. This made the industry more organised and competitive.
📌 Part 4: Mutual Funds Grow Bigger (2003 – 2013)
In the early 2000s, more people started investing in mutual funds. This was because more people understood how they worked, the market was doing well, and technology made investing easier.
📅 2003: UTI became a regular company under SEBI’s control, and foreign companies started selling mutual funds in India.
📅 2006: Systematic Investment Plans (SIPs) became popular. They allow people to invest small amounts of money regularly, making investing more affordable.
📅 2008: The world had a financial crisis, which caused the market to drop. However, the Indian mutual fund industry recovered quickly.
📅 2012: SEBI required companies to disclose all their fees to investors, helping people make better choices.
➡️ Mutual funds started reaching people in smaller cities and towns, which helped the industry grow.
📌 Part 5: Digital Investing and More Awareness (2013 – Today)
In the last ten years, the mutual fund industry has grown significantly because of online investing and campaigns teaching people about investing.
📅 2015: SEBI introduced Direct Plans, which let people invest directly without using agents. This helped people save money on fees.
📅 2016: Using Aadhaar for eKYC made it easier and faster to start investing.
📅 2017: The “Mutual Funds Sahi Hai” campaign helped more people learn about mutual funds and start investing.
📅 2018: SEBI made clear categories for mutual funds, which made it easier for people to choose the right plans.
📅 2020 – 2021: During the COVID-19 pandemic, more people started investing online.
📅 2023: The total amount of money invested in mutual funds in India reached a very high number, showing how much the industry has grown.
📜 The Future of Mutual Funds in India
More and more people in India are learning how to invest their money. They understand that investing in mutual funds can help them build a better future. Thanks to the internet, it’s easier than ever to get started. Online tools and apps make investing simple, even for people who are new to it. This means more people can take control of their financial lives and work towards their goals.
Looking ahead, we’ll see interesting changes in the kinds of mutual funds people choose. Things like ETFs, which track the whole market, are becoming popular. Also, funds that focus on companies that are good for the environment and society (ESG funds) are starting to attract more investors. And because the world is becoming more connected, people are also interested in investing in funds that give them access to companies in other countries. These trends show that people are becoming more informed and are looking for diverse ways to grow their money.
📜 In Conclusion: How Mutual Funds Changed and What’s Next
We’ve seen how mutual funds in India have changed significantly over time. At first, there was just one company, UTI, run by the government. This meant there weren’t many choices for people, and things were slow to change.
Then, the government allowed more of its banks and companies to sell mutual funds. This gave people more options, but the industry mainly remained government-run.
When India’s economy opened, a significant change occurred. Private companies were allowed to sell mutual funds, which meant more competition and new ideas. The watchdog SEBI made rules to ensure people’s money was safe, a crucial step.
After that, things started to grow. More people learned about mutual funds, and technology made investing easier. Online investing became common, and things like SIPs made it possible for anyone to start saving.
Now, many companies sell mutual funds. You can easily invest from your phone, and many different funds exist. This is very different from the beginning.
What’s going to happen next? More people are learning about investing and want to do it online. We’ll see more new types of funds, like those focusing on companies that are good for the environment. Also, more people will invest in funds that track the whole market, like ETFs.
Most importantly, mutual funds are becoming a significant part of how people in India save for the future. As more people learn how to invest and technology makes it easier, mutual funds will play a more significant role in helping people reach their financial goals. The rules will keep changing to keep things safe and fair.
📢 Disclaimer
Mutual fund investments are subject to market risks, so read all scheme-related documents carefully before investing. Past performance is not indicative of future results. The information provided in this blog is for educational and informational purposes only and should not be considered investment advice. Investors should consult their financial advisors before making any investment decisions. VSJ FinMart is an AMFI-registered mutual fund distributor (MFD) that does not provide portfolio management or stock advisory services.