Steady growth of mutual fund business in India in the four decades from 1964, when UTI was set up is given in the table below

The downturn in the industry during 1996 to 1998 due to steep slump in the securities market at that time and the fluctuations in recent years after 2000 is due to problems faced by UTI. This is discussed in a later article

[Source: SEBI & AMFI]

Unit trust of India (UTI) is the India's largest Mutual Fund organisation. UTI manages funds over Rs. 58,221 crore as on 30/6/2001 and over 41.80 million investors account under 85 schemes.

UTI was set up in 1964 by an act of parliament and commenced its operation from July 1964, with a view to encouraging saving and investment and participation in the income, profit and gain accruing to corporation from the acquisition, holding, management and disposal of securities.

UTI is a trust without ownership capital and independent Board of trustees. The first scheme was Unit scheme 1964. The contributors of initial capital of Rs. 5 crore for US-64 scheme were RBI, LIC, SBI and some foreign banks. Under the provision of the act, chairman of the board would be appointed by the Government of India. Today it have 54 branch offices, 266 chief representatives and about 67,000 agents. It provide complete range of services to its investors.

UTI has set up associate companies in the field of banking, securities, trading, investor servicing, investment advice and training, meeting investor's varying needs under a common umbrella.

1. UTI Bank Ltd. (1994)
   

2. UTI Securities Exchange Ltd (1994)

3. UTI Investors Services Ltd (1993)

4. UTI Institute of Capital Market (1989)

5. UTI Investment Advisory Services (1988)

6. UTI Mutual Fund Growth Schemes

[Source: Website of "eastindiavypar.com"]

According to data published by SEBI, the mutual funds have mobilised a gross amount of Rs.61,241.23 crores during the financial year 1999-2000 as against Rs.22,710.73 crores mobilised during the previous year 1998-1999.

After adjustment of repurchases and redemptions, there was an inflow of funds of Rs.18,969.88 crores in the financial year 1999-2000 as against net outflow of Rs.949.67 crores during the year 1998-99

Further analysis of data shows that there was a net inflow of funds of Rs.15,166.48 crores in case of private sector mutual funds compared to net inflow of Rs.1,452.70 crores during the previous year 1998-1999. While there was a net inflow of Rs.4,548.32 crores in case of UTI as against net outflow of Rs.2,737.53 crores during the previous year, there was a net outflow of Rs.744.92 crores in case of other public sector mutual funds (as against net inflow of Rs.335.16 crores during the previous year).

During the last four years UTI is facing severe crisis due to volatility in the interest rate structures of the money market and falling scale of yields in its investment against committed higher returns to the investors. Government of India has come to the support of UTI and has worked out a package for meeting its commitments and restructuring the same. These are discussed in detail in subsequent articles