Mutual Funds in India have come a long way since first established in 1964. The articles takes a detailed look on the very basics of this investment avenue.

The major cause of underdevelopment of a country is the poor capital formation as it is sine qua non for development. The famous economist, Prof. Ragnar Nurkse's concept of vicious circle of poverty clearly established this fact. The mobilization of small savings is one of the important aspects of prelude to capital formation in a country. Even though the Nurksian theory takes a different route to make the circle virtuous, the essence of the theory hovers around the capital formation concept. Mutual funds are engaged in mobilization of small savings in the economy and play the most crucial role in the capital formation and for the development of a country. They act as a vital link between the retail/small investors and the capital market by mobilizing the funds from innumerable investors across the country and thereafter investing the same in capital market in most scientific way so as to maximize the return on investment. With the primary objective of maximum return, it has been a lucrative avenue for investment specifically in the reforms era in the Indian subcontinent.

The Mutual Funds (MF) originated in UK and thereafter they crossed the border to reach other destinations. The concept of MF was indianized only in the later part of the twentieth century in the year 1964 with its roots embedded into Unit Trust of India (UTI). The UTI was the lone concern in the field of mutual fund till 1987, when two financial behemoths like, SBI and Canara Bank came with a big bang with an intention to nurture the concept. The present status of the MF industry is mainly due to the major effort by these three progenitor musketeers. In April 1992 the Government announced the setting of Money Market Mutual Funds (MMMF) with the purpose of bringing money market instruments within the reach of individuals. Scheduled commercial banks and public financial institutions are permitted to set up MMMFs. The units of MMMF are specifically meant for individuals.

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