History on WebNotes

Bandhan Group acquisition of IDFC Mutual Fund (2022)

Tue, 12 May 2026 00:00:00 +0000

The Bandhan Group acquisition of IDFC Asset Management Company in 2022 was a landmark consolidation in the Indian mutual fund industry, transferring a mid-sized AMC with approximately Rs 1.17 lakh crore in assets under management from the IDFC Financial Institutions group to Bandhan Financial Holdings Limited, the holding company of Bandhan Bank and the broader Bandhan financial services franchise. The transaction represented one of the largest AMC acquisition by value in Indian history, with the consideration estimated at approximately Rs 4,500 crore based on disclosed financial terms.

DHFL default impact on credit-risk funds

Tue, 12 May 2026 00:00:00 +0000

The DHFL default and its impact on credit-risk mutual funds unfolded through 2019 and 2020 as Dewan Housing Finance Corporation Limited (DHFL), at its peak India’s third-largest private housing finance company, progressively ceased to service its market borrowings, ultimately triggering the first use of the Insolvency and Bankruptcy Code (IBC) against a financial services entity. For Indian credit-risk funds and other debt mutual fund schemes that held DHFL’s non-convertible debentures (NCDs) and commercial paper, the episode produced significant NAV write-downs, accelerated redemptions, and reinforced the market’s already-heightened post-IL&FS scepticism about the creditworthiness of non-bank lenders. The episode also produced SEBI’s first large-scale enforcement exercise around credit risk classification and side-pocket usage.

Franklin Templeton six-scheme winding-up (April 2020)

Tue, 12 May 2026 00:00:00 +0000

The Franklin Templeton six-scheme winding-up of 23 April 2020 was the abrupt and unilateral closure of six fixed-income open-end mutual fund schemes by Franklin Templeton Asset Management (India) Private Limited, trapping approximately Rs 25,000 crore (then approximately USD 3.3 billion) of investor assets at the outset. The closure, announced without prior public notice or investor consent, constituted the largest simultaneous wind-up of open-end mutual fund schemes in Indian history. It set off protracted legal proceedings before the Supreme Court of India, a landmark enforcement action by the Securities and Exchange Board of India , and fundamental regulatory changes that reshaped the liquidity and governance framework applicable to all debt mutual funds in the country.

HDFC AMC IPO (2018)

Tue, 12 May 2026 00:00:00 +0000

The HDFC Asset Management Company Limited IPO of July 2018 was India’s first public listing of a significant asset management company, bringing to the stock market the country’s largest AMC by equity AUM and profitable fee-income franchise. Listed simultaneously on the National Stock Exchange of India and the Bombay Stock Exchange on 6 August 2018, HDFC AMC’s IPO was subscribed approximately 83 times overall and listed at a significant premium to its issue price of Rs 1,100 per share. The offering established an earnings-multiple benchmark for asset-light fund management businesses in India that influenced the subsequent valuations of the UTI AMC IPO of 2020 , the Aditya Birla Sun Life AMC IPO of 2021, and Nippon India AMC’s listing.

History of Mutual Funds in India (1963 to 2026)

Tue, 12 May 2026 00:00:00 +0000

The first mutual fund in India was the Unit Trust of India, established on 1 February 1964 under the Unit Trust of India Act, 1963. The history of mutual funds in India spans more than six decades, beginning with the creation of the Unit Trust of India (UTI) by that Act of Parliament, passed in December 1963, and culminating in a 44-AMC industry managing assets exceeding Rs 67 lakh crore by early 2026. The journey traverses three broad eras: a state-monopoly phase (1963-1992), a managed liberalisation phase (1992-2003), and a competitive private-market phase (2003-present) defined by SEBI regulation, direct plans, and the Systematic Investment Plan (SIP) revolution.

HSBC acquisition of L&T Mutual Fund (2022)

Tue, 12 May 2026 00:00:00 +0000

The HSBC Asset Management India acquisition of L&T Investment Management Limited in May 2022 consolidated two mid-sized mutual fund franchises into a combined entity with approximately Rs 82,000 crore of assets under management, making HSBC Mutual Fund one of the top-ten AMCs in India by AUM. The transaction involved HSBC Asset Management (India) Private Limited acquiring L&T Investment Management from L&T Finance Holdings Limited, the listed NBFC arm of the Larsen and Toubro engineering and infrastructure conglomerate, for an enterprise value of approximately Rs 3,188 crore.

IL&FS default impact on debt funds (2018)

Tue, 12 May 2026 00:00:00 +0000

The IL&FS default of September 2018 marked the most consequential single credit event in the Indian debt mutual fund market in the decade preceding the COVID-19 crisis. When Infrastructure Leasing and Financial Services Limited (IL&FS) and its subsidiaries began defaulting on short-term commercial paper and non-convertible debenture obligations in September 2018, mutual funds holding these instruments suffered immediate net asset value (NAV) write-downs, interbank and capital market credit flowed sharply away from non-banking financial companies (NBFCs), and the Securities and Exchange Board of India was compelled to introduce a suite of emergency and structural regulatory measures. The episode revealed deep weaknesses in credit risk assessment, concentration management, and valuation practices within Indian fixed-income mutual funds and accelerated reforms that reshaped the industry for years.

JP Morgan India Amtek Auto incident (2015)

Tue, 12 May 2026 00:00:00 +0000

The JP Morgan India Amtek Auto incident of August 2015 was the first instance in Indian mutual fund history in which an asset management company unilaterally suspended redemptions from open-end debt schemes following a credit event. JP Morgan Asset Management (India) Private Limited restricted redemptions from its India Short Term Income Fund and India Treasury Fund after Amtek Auto Limited’s non-convertible debentures (NCDs) held in those schemes were downgraded to below-investment grade, triggering an immediate write-down of NAV and a liquidity crisis within the funds. The episode preceded the more systemic IL&FS default of 2018 and Franklin Templeton winding-up of 2020 but established many of the procedural and regulatory questions those later crises would reopen at far larger scale.

Karvy Stock Broking pledge-misuse case (2019) and RTA implications

Tue, 12 May 2026 00:00:00 +0000

The Karvy Stock Broking pledge-misuse case of 2019 was one of the most significant broker-client securities fraud incidents in Indian capital market history. Karvy Stock Broking Limited (KSBL), one of India’s largest equity brokers by client account count, was found to have pledged client securities held in client demat accounts, without the knowledge or authorisation of those clients, with banks and NBFCs to raise loans for the benefit of Karvy group companies, including its real estate arm. The total unauthorised pledges amounted to approximately Rs 2,873 crore, affecting approximately 95,000 client accounts. The episode prompted emergency regulatory action by the Securities and Exchange Board of India , CDSL, and NSE, and raised specific governance concerns about the role of Karvy’s integrated registrar and transfer agent (RTA) business in the group’s operations.

NAV cut-off time reform for mutual funds (1 February 2021)

Tue, 12 May 2026 00:00:00 +0000

The NAV cut-off reform effective 1 February 2021 was a fundamental change to the rules governing which net asset value (NAV) is allotted to a mutual fund investor’s purchase transaction, implemented by the Securities and Exchange Board of India through Circular No. SEBI/HO/IMD/DF2/CIR/P/2020/253 dated 31 December 2020. Prior to this reform, mutual fund purchases above Rs 2 lakh in debt schemes were allotted the same-day or next-day NAV if the transaction application was submitted before the scheme’s cut-off time, regardless of whether the investor’s funds had actually reached the AMC’s account. The reform mandated that the applicable NAV be allotted only after the investor’s funds were realised in the AMC’s bank account, regardless of the time of application submission. This change eliminated a timing arbitrage mechanism that had been exploited by large institutional investors and treasuries in debt funds.

Nifty BeES, India's first exchange-traded fund (2001)

Tue, 12 May 2026 00:00:00 +0000

Nifty BeES (Nifty Benchmark Exchange-Traded Scheme), launched on 28 December 2001 by Benchmark Mutual Fund on the National Stock Exchange of India , was the first exchange-traded fund in India and the first equity-index ETF in Asia. It tracked the Nifty 50 index , with each unit representing one-tenth of the Nifty 50 index value, and was listed and continuously traded on the NSE during market hours at prices close to its net asset value. The launch of Nifty BeES preceded any mainland Chinese or Japanese equity ETF and inaugurated passive index investing as a viable instrument for Indian retail, institutional, and provident fund investors.

Nippon Life acquisition of Reliance Mutual Fund (2019)

Tue, 12 May 2026 00:00:00 +0000

The Nippon Life acquisition of a controlling stake in Reliance Nippon Life Asset Management in October 2019 transformed one of India’s oldest and largest asset management companies from an Anil Ambani group entity into a Japanese-controlled subsidiary of Nippon Life Insurance Company, one of the world’s largest insurance corporations. The transaction, consummated through open market purchases and block deals on NSE and BSE, saw Nippon Life increase its shareholding from approximately 42.88 percent to approximately 75 percent in Reliance Nippon Life Asset Management Limited (RNLAM), triggering a mandatory open offer and culminating in the company’s rebranding as Nippon India Mutual Fund. The acquisition resolved the governance uncertainty created by the deteriorating financial condition of Reliance Capital Limited, the promoter AMC shareholder, and stabilised one of India’s largest AMC franchises during a period of industry stress.

SEBI multi-cap reclassification circular (September 2020)

Tue, 12 May 2026 00:00:00 +0000

The SEBI multi-cap reclassification circular of 11 September 2020, formally Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/185, mandated that all mutual fund schemes categorised as “multi-cap funds” must invest a minimum of 25 percent each in large-cap, mid-cap, and small-cap stocks, with no more than 25 percent in any category left to fund manager discretion. Before this circular, multi-cap funds had operated with complete investment flexibility across market capitalisations, and in practice most had accumulated predominantly large-cap heavy portfolios with minimal mid and small-cap allocations despite their multi-cap category designation. The circular required these funds to substantially increase their small-cap and mid-cap allocations, triggering one of the largest mandatory portfolio rebalancing events in the history of the Indian mutual fund industry . It also prompted the Securities and Exchange Board of India to create a new “flexi-cap fund” category to preserve the option of genuinely flexible equity mandates without the new minimum allocation requirements.

Side-pocketing introduction in Indian mutual funds (2018)

Tue, 12 May 2026 00:00:00 +0000

Side-pocketing, formally termed “segregated portfolio” in Indian regulatory terminology, is a mechanism that allows a mutual fund scheme to separate debt or money market instruments affected by a credit event into a distinct sub-portfolio, ring-fencing the impaired assets from the main portfolio and protecting ongoing investors from dilution by redemption outflows. The mechanism was introduced in India by the Securities and Exchange Board of India through Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160, issued on 28 December 2018, directly in response to the valuation and fairness challenges exposed by the IL&FS default of September 2018 . Side-pocketing had been debated in the Indian mutual fund industry for several years before the Association of Mutual Funds in India recommended its adoption in the wake of the IL&FS crisis.

Sundaram acquisition of Principal Mutual Fund (2021)

Tue, 12 May 2026 00:00:00 +0000

The Sundaram Asset Management Company acquisition of Principal Asset Management (India) Private Limited in 2021 represented the exit of the US-headquartered Principal Financial Group from its Indian mutual fund joint venture and the absorption of its approximately Rs 6,800 crore AUM into the Sundaram Mutual Fund franchise. The acquisition, announced in April 2021 and completed later that year, was one of several AMC consolidation transactions in the 2019 to 2022 wave that reshaped the composition of the Indian asset management landscape by eliminating sub-scale standalone AMC entities.

UTI Master Index Fund (1998), India's first index fund

Tue, 12 May 2026 00:00:00 +0000

UTI Master Index Fund, launched in 1998 by the Unit Trust of India, was India’s first passive index-tracking mutual fund. Structured as an open-end scheme that replicated the composition of the BSE Sensex (the Bombay Stock Exchange’s benchmark 30-stock index), the fund offered investors proportionate exposure to India’s large-cap equity market at lower cost than active equity funds, without relying on a fund manager’s stock-selection decisions. Its launch predated the Nifty BeES ETF of December 2001 by approximately three years, making it the foundational product in the history of passive investing in India.

UTI Mutual Fund IPO (2020)

Tue, 12 May 2026 00:00:00 +0000

The UTI Asset Management Company Limited IPO of October 2020 was the initial public offering of India’s oldest and historically most prominent asset management company, bringing to public markets an institution that traced its lineage to the Unit Trust of India Act of 1963. The IPO listed UTI AMC on both the National Stock Exchange of India and the Bombay Stock Exchange on 12 October 2020, at a price of Rs 500 per share, implying a market capitalisation of approximately Rs 6,357 crore at the time of listing. The offering followed the HDFC AMC IPO of 2018 , which had established a market precedent for the valuation of asset-light fund management businesses in India.

UTI US-64 crisis (2001)

Tue, 12 May 2026 00:00:00 +0000

The UTI US-64 crisis of July 2001 was a systemic failure of Unit Trust of India’s flagship US-64 scheme that forced an emergency suspension of repurchases, a government-funded bailout exceeding Rs 14,500 crore, and a fundamental restructuring of India’s oldest and largest mutual fund organisation. The crisis exposed the dangers of offering guaranteed or price-supported returns to retail investors through vehicles that lacked mark-to-market accounting, concentrated equity exposures, and transparent governance. It triggered the eventual dissolution of UTI as a unified statutory body, compelled sweeping regulatory amendments by the Securities and Exchange Board of India , and reshaped investor expectations of the mutual fund industry in India for the subsequent decade.