The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. Now Mutual fund industry in India has 40 players. The number of public sector players has reduced from 11 to 5. The public sector has gradually receded into the background, passing on a large chunk of market share to private sector players.
The Association of Mutual fund in India (AMFI) is the industry body set up to facilitate the growth of the Indian mutual fund industry. It plays a pro-active role in identifying steps that need to be taken to protect investors and promote mutual fund sector. It is noteworthy that AMFI is not a self-regulatory organization (SRO) and its recommendations are not binding on the industry participants. By its very nature, AMFI has an advisor's or a counselor's role in the mutual fund industry. Its recommendations become mandatory if and only if the Securities and Exchange Board of India (SEBI) incorporates them into the regulatory frame work it stipulates for mutual funds.