Indian Mutual Fund Industry: Challenges and Future Prospects

INDIAN MUTUAL FUND INDUSTRY: CHALLENGES AND FUTURE PROSPECTS Ms.Renu Introduction India has been the fastest growing markets for mutual fund industry. With progressive liberalization of economic policies, there has been rapid growth of capital market, money market and financial services Industry including merchant banking, leasing and venture capital (Tripathy, 1996). The increasing globalization of financial groups, rapid spread of multinationals and strong excellent performance of equity and bond markets in India has led to the evolution of mutual funds. Now it has evolved from a single player monopoly in 1964 to a fast growing market. To the date assets under management of 38 mutual funds stood at Rs. 7, 47,524.58 crore. Increasing number of mutual funds in the developed financial markets indicate investor’s preference for the mode of investment (Huhmann, 2005, Talat AFZA and Ali Rauf, 2006). Mutual funds deploy their funds in marketable instruments. So well developed securities market is pre-requisite for the successful operations of mutual funds.

Origin and Legal Framework of Mutual Funds in India
The concept of mutual funds evolved in India in July 1964, when at the initiative of the government of India and the Reserve Bank of India, Unit Trust of India was set up to mobilise the savings of the middle class investors and to invest those funds in the capital market for the much needed industrial growth. As only 1/3 of household savings were at the disposal of the corporate sector, UTI was established to channelize large shares of household savings to productive investment in the corporate sector. Regulatory framework of Indian mutual funds