UTI on WebNotes

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.

Mutual fund industry in India

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

The mutual fund industry in India encompasses all asset management companies (AMCs), schemes, and intermediaries that pool capital from retail and institutional investors to invest in securities markets under the regulatory oversight of the Securities and Exchange Board of India . As of March 2024, the industry managed assets under management (AUM) exceeding Rs 53 lakh crore (approximately USD 640 billion), spread across 44 SEBI-registered AMCs offering more than 1,500 distinct schemes. The industry serves over 180 million unique investor folios and channels a significant share of domestic household savings into equity and debt capital markets.

Unit Trust of India

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

The Unit Trust of India (UTI) was a statutory body established under the Unit Trust of India Act, 1963, by the Government of India in partnership with the Reserve Bank of India . It operated from 1964 until its bifurcation under the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002. UTI was India’s first and, for over two decades, its only mutual fund entity, mobilising household savings through its network of agents and unit offices across the country. At its peak in the late 1990s, UTI managed assets of approximately Rs 78,000 crore and held unit accounts for tens of millions of small investors.

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 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.