NISM-Series-V-A: Mutual Fund Distributors · Concept and Role of a Mutual Fund

History of the Indian Mutual Fund Industry and AMFI's Role

Updated 11 October 2026 · Fact-checked

The Indian mutual fund industry began with UTI in 1964, opened to public sector funds in 1987 and private sector funds in 1993, and was reshaped when the UTI Act was repealed in 2003. SEBI regulates mutual funds. AMFI is the industry body that sets standards and issues ARNs. Learn the phases in order.

Understand Fund Governance and Mutual Fund Industry Overview

A mutual fund pools money from many investors and invests it in securities. In India it is set up as a trust. The industry around it has a history, a regulator, an industry body and a set of entities that run each fund. The exam tests all four.

The history is taught in phases. First came the UTI monopoly. Unit Trust of India was set up by an Act of Parliament in 1963 and began operations in 1964. For years it was the only mutual fund. Its flagship scheme was US-64. Early on it was linked to the RBI. Later, IDBI took over its administrative and regulatory control.

Next came public sector funds from 1987. SBI Mutual Fund was the first non-UTI fund. Other public sector banks and insurers followed, such as Canbank, LIC, Bank of India, Indian Bank, PNB and GIC. Then came private sector entry from 1993. Kothari Pioneer was the first private sector fund. SEBI's Mutual Fund Regulations came in 1993 and were replaced by the SEBI (Mutual Funds) Regulations, 1996, which still form the base of regulation. Foreign fund houses also entered.

In 2003 the UTI Act was repealed. UTI was split into two parts. One was the Specified Undertaking of UTI, which held the assured-return schemes such as US-64. The other was UTI Mutual Fund, which became a SEBI-registered fund like any other. After this, all funds came under one regulatory framework. The industry has since grown strongly in assets and investor numbers. SIPs and retail participation are major drivers. Different books mark the phase boundaries slightly differently, so match your answer to the NISM workbook wording.

Now the people and bodies. SEBI is the regulator. It registers mutual funds and makes the rules. AMFI (Association of Mutual Funds in India) was formed in 1995 as a non-profit body. All AMCs are its members. It is not a regulator. It works to develop the industry on professional, healthy and ethical lines. It sets a code of conduct for distributors, issues the AMFI Registration Number (ARN) and works with NISM on distributor certification. The fund itself has a sponsor, trustees, an asset management company (AMC), a custodian and a registrar and transfer agent (RTA). Each has a different job. You study those separately.

Key formulas to remember

UTI timeline: 1963 Act → 1964 operations → 1987 public sector funds → 1993 private sector funds → 2003 UTI Act repealed; Remember the order and the first fund of each phase. Dates are the usual exam hooks.
First funds: First fund: UTI | First non-UTI public sector fund: SBI MF (1987) | First private sector fund: Kothari Pioneer (1993); Questions often ask 'which was first' and offer the other two as traps.
Regulation vs self-regulation: SEBI = regulator | AMFI = industry body (not a regulator); SEBI frames rules and registers funds. AMFI sets industry standards and issues ARN.
Legal base: SEBI (Mutual Funds) Regulations, 1996 | UTI Act repealed in 2003; The 1993 regulations were replaced by the 1996 regulations.
AMFI facts: Formed 1995 | Non-profit | All AMCs are members | Issues ARN; AMFI is not a SEBI body and does not register mutual funds.

How to solve Fund Governance and Mutual Fund Industry Overview questions

Use this method for any question on industry history, AMFI or the entities in the ecosystem.

1Read the stem and decide what it tests: a date or phase, a 'first', a body's role, or an entity's function.
2If it is history, place the event on the timeline: UTI 1964, public sector 1987, private sector 1993, UTI split 2003.
3If it asks who regulates or registers, think SEBI. If it asks about standards, code of conduct or ARN, think AMFI.
4If it names an entity, recall its one-line job: sponsor sets up the fund, trustees oversee, AMC manages, custodian holds securities, RTA handles records.
5Look for absolute words such as 'only' and 'always'. Check whether they fit the facts.
6Remove options that mix up bodies, such as AMFI registering funds or SEBI issuing ARN.
7Pick the one option that fits the rule exactly, then re-read the stem once.

Quickest way: Timeline and role anchors

When to use it: Use this when you have under a minute per question and the options look similar.

Recall the chain: 1964 UTI, 1987 SBI MF, 1993 Kothari Pioneer, 2003 UTI split.
Link each body to one verb: SEBI regulates, AMFI promotes standards and issues ARN, AMC manages, trustees oversee.
Match the stem's verb to the body and eliminate the rest.
If two options remain, check the date or the word 'first'.

Common mistakes in Fund Governance and Mutual Fund Industry Overview

Calling AMFI a regulator of mutual funds.
AMFI sets a code of conduct and issues ARN, so it looks like an authority.
Fix: Remember that SEBI is the regulator. AMFI is a non-profit industry body whose members are the AMCs.
Naming SBI Mutual Fund as the first mutual fund in India.
Students forget that UTI existed before 1987.
Fix: UTI came first (1964). SBI MF was the first non-UTI public sector fund.
Treating Kothari Pioneer as the first public sector fund or SBI MF as the first private fund.
Both are 'firsts' in nearby phases and are easy to swap.
Fix: Tie 1987 to public sector and SBI. Tie 1993 to private sector and Kothari Pioneer.
Saying the UTI Act was repealed in 1993 or that UTI was closed down.
Students mix up the 1993 private entry with the 2003 event.
Fix: The UTI Act was repealed in 2003 and UTI was split into two parts. UTI Mutual Fund continues under SEBI rules.
Confusing the 1993 and 1996 SEBI regulations.
Both are SEBI mutual fund rules and both appear in the notes.
Fix: The 1993 regulations were replaced by the SEBI (Mutual Funds) Regulations, 1996, which is the current base.
Assigning one entity's job to another, such as the custodian managing the portfolio.
Students memorise names without the function.
Fix: Learn one verb for each: the AMC manages investments, the custodian safekeeps securities, the RTA maintains unitholder records.

Worked examples

Example 1

Which was the first non-UTI public sector mutual fund in India?
A. Kothari Pioneer Mutual Fund
B. SBI Mutual Fund
C. LIC Mutual Fund
D. Canbank Mutual Fund

Show the solution

The stem asks for a public sector fund that is not UTI, so the phase is 1987.
Kothari Pioneer was a private sector fund from 1993, so A is out.
LIC and Canbank also came after 1987 in the public sector wave.
SBI Mutual Fund was the first in 1987.

Answer: B. SBI Mutual Fund

Example 2

Which statement about AMFI is correct?
A. It registers mutual funds in India.
B. It frames the SEBI (Mutual Funds) Regulations.
C. It is a non-profit industry body that issues ARN to distributors.
D. It approves the scheme offer documents of every fund.

Show the solution

Registration of funds and making regulations are SEBI's work, so A and B are wrong.
Offer documents are filed with SEBI, which reviews them. AMFI does not approve them, so D is wrong.
AMFI was formed in 1995 as a non-profit body of AMCs. It sets a code of conduct for distributors and issues ARN.
Only C matches.

Answer: C. It is a non-profit industry body that issues ARN to distributors.

Exam tips

Learn the timeline as one chain of dates and 'firsts'. Most history questions come from it.
Always separate SEBI (regulator) from AMFI (industry body). Many trap options swap them.
Do not stress about exact asset figures. Know the direction of growth and the drivers, not unverified numbers.
NISM-Series-V-A has no negative marking, so attempt every question. Still eliminate wrong options first.
Read the stem for words like 'first', 'only' and 'not'. One word can flip the answer.

Practice questions from Concept and Role of a Mutual Fund

Fund Governance and Mutual Fund Industry Overview: frequently asked questions

What are the phases of the mutual fund industry in India?

The usual phases are the UTI monopoly from 1964, public sector funds from 1987, private sector entry from 1993, and the post-2003 phase after the UTI Act was repealed and UTI was split. Match the phase wording to your NISM workbook.

What is the role of AMFI in the mutual fund industry?

AMFI is a non-profit industry body formed in 1995 with all AMCs as members. It promotes professional and ethical standards, sets a code of conduct for distributors and issues the ARN. It also works with NISM on distributor certification.

Who regulates mutual funds in India, SEBI or AMFI?

SEBI is the regulator. It registers mutual funds and frames the rules, mainly the SEBI (Mutual Funds) Regulations, 1996. AMFI is an industry body and does not regulate.

What happened to UTI in 2003?

The UTI Act was repealed in 2003. UTI was split into the Specified Undertaking of UTI and UTI Mutual Fund. UTI Mutual Fund became a SEBI-registered fund like other mutual funds.