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History of Indian Mutual Fund Industry

With the emergence of diverse productive avenues for investing, mutual funds have become one of the most popular investment options. This is a simple investment product structured around the concept of risk mitigation by spreading investments in multiple channels. According to Nielsen global survey of investment attitudes,it is one of the favourite investment options that ranked atop among the other assets like precious metals, stocks and bonds.

In this article, we will look at the history of the mutual fund industry which grew fairly successfully and helped large number of investors generate wealth over the years.

Entry of mutual funds in India (1963)

This concept emerged in India in 1963 by the formation of Unit Trust of India (UTI) which is a watermark in annals of this industry in India. These are initiated by government and the Reserve Bank of India (RBI), with an aim to attract small investors and were focused mainly on investing for creating wealth in the long run.

Monopoly era by UTI (1964-1987)

Established through an Act of parliament in 1963, the Unit Trust of India (UTI) enjoyed monopoly status for 23 years and functioned under the regulation of RBI for a period of 15 years. Later, it was de-linked from RBI in 1978 and functioned under the regulation of Industrial Development Bank of India (IDBI) which took over the administrative control in place of RBI. The first unit scheme of UTI was launched in 1964 and later more innovative schemes were launched in 1970’s and 1980’s to attract and suit the needs of Indian retail investors. By the end of 1987, the Assets Under Management (AUM) of UTI increased by ten times to Rs 6700 crore.

Entry of Public Sector Players (1987)

Public sector mutual fund players entered in the market in 1987. SBI mutual fund was the first non-UTI mutual fund in India. It has been successfully managing large investor’s funds since 1988. It launched many schemes to provide investors with opportunities for making profits in a diversified basket of stocks of Indian companies.

Later, such schemes were launched by Canbank mutual fund in (1987), Life Insurance Corporation (LIC) in (1989), Punjab Mutual Fund (Punjab National Bank) in (1989), Bank of India in (1990), General Insurance Corporation (GIC) in (1990). By the close of 1993, the AUM of this industry had increased seven times and had Rs 47,004 crore of assets under management. However, the UTI retained its position as the dominant player with 80% market share.

Entry of Private Sector Players (1993)

To provide a wider choice of funds to Indian investors, private sector players along with foreign companies were permitted to enter into the industry in 1993. In the same year, the first mutual fund regulation was passed, saying all mutual fund companies except UTI need to be registered and governed. In 1993, the erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund company in India. During 1994-95, 11 private sector funds have launched their schemes introducing innovative investment strategies.

SEBI – Mutual Funds Regulation (1996)

This industry witnessed a sea change in the 1990s. In 1993, the industry started functioning under the regulation of Securities and Exchange Board of India (SEBI). This is, probably, the most elaborate regulatory effort in the history of mutual fund industry of India. Consequently, there was a spurt in the number of mutual fund houses with many foreign players setting up funds in India. By the end of 2003, there were 33 mutual fund companies with total AUM of Rs 1,21,805 crore. The largest UTI had Rs 44,541 crore of AUM in the same year.

In 2003, UTI was disaggregated into two entities. One is the Unit Trust of India with AUM of Rs 29,835 crore (as on Jan 2003). This has been functioning under an administrator and under the rules framed by Government of India. This does not come under the purview of the Mutual Fund Regulations.

And the second one is UTI Mutual Fund Ltd, sponsored by State Bank of India, Punjab National Bank, Bank of Baroda and LIC of India. This is registered with SEBI and functions as per mutual fund regulations. Currently Unit Trust of India works under the name UTI mutual fund and some of its earlier schemes were gradually wound up. However, UTI mutual fund is the largest player in the mutual fund industry.

As Indian this industry experienced major growth, simultaneously international mutual funds like Fidelity, Franklin Templeton Mutual Fund, etc. entered Indian market. There are 44 mutual fund players in the market until March 2012. This industry has AUM of Rs 6.92 lakh crore as on June 2012.

The Indian Handicraft Industry

India is a land where exporting is much a necessity than a preferred choice. It is a highly populated land where commerce and business are the need of the hour. And then, India is also a leader in various fields, and the abundance of few specialized items can afford it to export such items. However, when we talk about the Indian Export Business, do we easily think of Handicraft industry? Not really, because Agriculture as a major export area is a famous and popular concept, overshadowing many other fields.

India is indeed one of the major exporters of handicrafts and gift items. Owing to a heritage of rich art and craft culture in ancient times, Indian Handicraft sector is recognizable for their most popular craft items like earthenware, pottery, woodwork, sculpting, scarves, shawls, textiles, embroidered and knitted goods, zari items, jewelry, etc. Indian Handicraft goods have a great demand overseas, as they are a perfect mix of traditional designs with modern techniques. The export of Handicraft items in India is growing exponentially, and so-much-so that it is emerging as the second largest employment generating sector after Agriculture. Hence, a large number of artisans are engaged in designing pottery and other craft work.

The Agriculture Export Business is increasing at a consistent growth rate and is spreading its wings to various nations. India has been exporting its products to USA, UK, Germany, France, Netherlands, Spain, Italy, UAE, Canada, Belgium and others countries. From various exported handcraft items, few that are high on the demand list are Wood wares, Hand printed textiles, Shawls, Zari Goods, Imitation Jewelry, Crocheted Goods and more.

Another reason for the popularity of Indian Handicraft goods is the exceptional and varied design items. Consisting of 28 states, India offers an enormous range of handicraft products, where many states have their own handicraft USP. Following is listed the various Handicraft items and the Indian states they are associated with it.

? Wooden ware- Saharanpur, Hoshiarpur, Srinagar, Amritsar, Jaipur, Jodhpur, Mysore, Madras, Kerala, Behrampur

? Marble and Stone Craft- Jodhpur, madras, Agra

? Zari Goods- Madras and Rajasthan

? Art Metal- Moradabad, Aligarh, Rewari, Jodhpur, Jaipur, Delhi, Madras, Beedar, Kerala, Jaisalmer

? Jewelry- Delhi, Moradabad, Kohima

? Papier Mache items- Kashmir, Rajasthan and Bihar

The Indian Handicraft goods are used for leisure pursuits and as a style statement. The manufacture of Handicraft goods is giving employment to many people in India, and has forged an unsurpassed reputation in the international market.