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Sunday, September 08, 2019

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Indian Mutual Fund History From 1963 to 2019 August

Indian Mutual Fund History  
From 1963 to 2019 August

Formation of the Unit Trust of India

Launch of the maiden scheme of  UTI-Unit Scheme

Entry of public sector  funds SBI Mutual Fund was first one followed by Canbank Mutural Fund

Emergence  of private sector funds Franklin Templeton  (erstwhile Kothari Pioneer) was the first of its kind.

Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed

SEBI (Mutual Funds) Regulations, 1996.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.


Association of Mutual Funds in India (AMFI) is an industry standards organisation in India in the mutual funds sector. It was formed in 1995. Most mutual funds firms in India are its members. The organisation aims to develop the mutual funds market in India, by improving ethical and professional standards. AMFI was incorporated on 22 August 1995. As of April 2015, there are 44 members.

A visible and ethical impact created by AMFI can be seen in advertisements of mutual funds where the instructions concerning the risky nature of mutual funds investments is clearly mentioned.


Robust growth and revised MF regulation from SEBI in 1996, entry of foreign funds, several mergers and acquisitions

Removal of the entry load

Single plan structure for mutual
fund schemes

Cash investment allowed in
mutual funds

Fungibility of total expense ratio (TER) allowed

Portion of TER to be used for
investor education

Entire exit load to be credited to
the scheme

Launch of Rajiv Gandhi Equity Savings Scheme (RGESS)


Reduction in Securities Transaction Tax (STT) for
equity funds

Uniform Dividend Distribution Tax (DDT) of 25% on all debt mutual funds

Product labelling

Introduction of direct plans

Changed the definition of 'long term' for debt mutual
funds to 36 months from 12 months for LTCG

Tax exemption limit for investment in financial
instruments under Section 80C raised to Rs 1.5 lakh
from Rs. 1 lakh

Launch of MF Utility (MFU) - Digital aggregator
platform by the industry, for the industry

SEBI asked fund houses to shift from colour
coding to Riskometer which classified schemes
based on the risk profile

EPFO started investing in the equity market via
Exchange Traded fund (ETF)

SEBI allowed gold ETFs to invest up to 20% of
their assets in the government’s Gold Monetisation Scheme

SEBI tightened norms for mutual fund investment in
corporate bonds

Allowed investment advisors to use the infrastructure of the stock exchanges for sale and purchase of mutual fund units

Provided easy entry to the foreign fund managers keen to enter India


SEBI allowed mutual funds to invest in REITs and InvITs.

 Allowed investment up to Rs 50,000 per mutual fund per financial year through digital

Instant access facility to the liquid funds investors (via online mode) of up to Rs. 50,000 or 90% of the folio value, whichever is lower

Government discontinued the tax benefits of RGESS


SEBI asked fund houses to benchmark returns of equity schemes  against a total return index (TRI)

SEBI introduced categorisation and rationalisation of mutual fund  schemes making it simpler for
investor to understand

 LTCG of 10% without indexation introduced for equity-oriented funds for investment horizon of > 1 year, subject to capital gains of over Rs. 1 lakh per assessee per year.  Dividend  plans of equity-oriented funds subject to a DDT of 10%, deducted at Source.

Mutual fund houses asked to disclose TER for all schemes under a separate head on their websites on a daily basis

 SEBI further redefined the scope for T15/B15 cities to T30/B30 and push for higher penetration


Industry adopt the full trail model of commission in all schemes without payment of any upfront commission.

Upfronting of trail commission will be allowed only in case of inflows through SIPs for new investors to the
industry (identified by PAN), up to 1% for
maximum of three years.

 AMFI website starts disclosing fund industry scheme industry performance data on a daily basis.

 Additional TER of 0.3% (30 bps) from B-30 cities
restricted to individual investors.

TER slabs cut by 0.25% for both equity and
debt schemes; the uppermost slab is pegged at
2.25% for equity funds having an AUM of up to
Rs. 500 crore, and 2% for other schemes.  In the highest AUM slab of above Rs 50,000 crore, the TER for equity funds would be 1.05% of the
scheme's AUM and 0.80% for other schemes.

SEBI allows side-pocketing if debt assets are
downgraded to below investment grade.

SEBI puts in place a robust and stricter cybersecurity framework for mutual funds and AMCs to guard against breaches of data leak, directs AMCs to constitute a technology committee to review the cyber security and resilience framework of the mutual fund industry.

Caps weightage of a single stock in sectoral and
thematic indices, and set norms for minimum stocks an index needs to have in a bid to protect investors from risks related to portfolio concentration in ETFs and index funds.

Industry threshold for amortisation of debt securities
changed to 30 days from 60 days, proposed to move to full MTM by early next year.

Proposed cap on sectoral limit of 25% has been brought down to 20%. The additional exposure of 15% to HFCs will be restructured as 10% to HFCs and 5% to securitised debt.

Prescribes minimum holding of 20% in cash, receivables and government securities to improve liquidity of liquid funds.

 Prescribes mandatory investment in listed securities

Source: CRISIL Report 2019


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