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A Detailed History of the Mutual Funds in India
Reviewed by: Fibe Research Team
- Updated on: 14 Oct 2025
Reviewed by: Fibe Research Team
If you’ve ever wondered when mutual fund started in India, the answer goes back to 1963, just a decade after India gained independence. The first mutual fund in India was launched by the Government of India and the Reserve Bank of India under the Unit Trust of India (UTI). This marked the beginning of the history of mutual funds in India, a journey that has evolved through multiple phases to become one of the most popular investment options today.
The very first scheme introduced was Unit Scheme 1964 (US-64), designed to encourage small investors to participate in the markets. Over time, UTI and other players shaped the mutual fund history of the country, making it a trusted tool for wealth creation. From public sector banks entering the space to the arrival of private players and tighter SEBI regulations, every milestone has added to the growth story.
The history of mutual funds in India can be understood better through 5 distinct phases. Each phase reflects how regulations, new entrants and investor awareness shaped the industry over the decades.
The origin of mutual funds dates back to 1963 when UTI launched the first mutual fund in India, known as Unit Scheme 1964 (US-64). This pioneering scheme laid the foundation for the mutual fund industry by attracting retail investors who were looking for returns higher than traditional savings.
Initially regulated by the RBI, UTI grew rapidly and by 1978, the Industrial Development Bank of India (IDBI) took over its management. Within a decade, UTI managed over ₹6,700 crores of assets. Interestingly, some of the earliest schemes from this period delivered annualised returns between 9% and 22%, proving how powerful market-linked investments could be.
The second phase in the history of mutual funds began when public sector entities joined the industry. The first bank to introduce mutual fund outside UTI was the State Bank of India (SBI Mutual Fund) in 1987. Soon after, other public sector banks and institutions like LIC, GIC, Punjab National Bank, and Bank of Baroda followed suit.
This period witnessed explosive growth, with the industry’s assets under management (AUM) expanding by nearly 600% by 1993.
A big milestone in the mutual fund history was the entry of private players. To regulate this growing sector, the Securities and Exchange Board of India (SEBI) was established in April 1992, bringing in a formal regulatory framework.
In 1993, the first private mutual fund, Kothari Pioneer, was launched. By 1996, SEBI introduced detailed mutual fund regulations, which still form the backbone of the industry today. By 2003, investors could choose from over 30 mutual fund houses and the AUM had grown to ₹1,20,000 crores.
During this time, investors also saw a wider range of schemes such as multi-cap funds, index funds, ELSS and sectoral funds, many of which remain popular investment choices even today.
This phase marked the end of UTI’s monopoly. In 2003, UTI was split into two entities — UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India (SUUTI).
The global financial crisis of 2008–09 had a significant impact on mutual funds, leading to heavy redemptions. To protect investors, SEBI abolished entry loads in 2009, making mutual fund investments more transparent and cost-effective.
Despite the turbulence, by 2014 the industry had regained its footing, preparing for its next big growth cycle.
From 2014 onwards, the mutual fund industry has seen unprecedented expansion. 2 factors played a huge role:
A key change in this phase was the introduction of Direct Plans alongside Regular Plans. Direct Plans gave investors the option to avoid distributor commissions, making mutual funds more affordable and accessible.
As a result, retail participation soared. By May 2021, the industry had crossed 10 crore folios and as of October 2024, the average AUM had touched a massive ₹68,50,321 crore. Today, mutual funds are not just about traditional large-cap or debt schemes — investors actively explore flexi-cap, contra, technology and sectoral funds depending on their goals and risk appetite.
Many Indians are now relying on mutual funds to grow their wealth as fund managers time the market and portfolios can be balanced by choosing a mix of asset classes. However, investing in these schemes limits your access to funds.
That’s where Fibe’s Loan Against Mutual Funds can be the right solution to bridge a financial gap or achieve your goals. Not only can you pledge over 8,000 mutual fund schemes, but you can also get up to ₹5 lakhs as a loan. While you can access cash, your investment continues to earn returns and you can choose to ease your repayment
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In India, RBI introduced mutual funds by establishing the Unit Trust of India (UTI). During the first phase of mutual funds, it was under the regulation of the RBI. Its aim was to contribute to the growth of the Indian economy and allow small investors to benefit from investing in securities.
You can use the following resources to find the history of a specific mutual fund, such as:
