The setting up of the Unit Trust of India (UTI) in 1963 heralded the
birth of the Indian mutual fund industry. In 1964, UTI mutual fund
launched its flagship scheme US-64 and went on to become a generic term
for the mutual fund sector till the government allowed public sector
banks to start mutual funds in 1987.
Despite being the trendsetter in the segment, the UTI mutual fund could
not sustain the initial tempo and was on the verge of a collapse in
2001, before the government bailed it out and restructured the fund.
After the restructuring, the fund has somewhat redeemed its credibility
through professional management and a booming market.
The fund's sponsors are public sector financial giants like Life
Insurance Corporation, SBI, Bank of Baroda and Punjab National Bank. The
sponsors hold equal stakes in the asset management company, UTI Asset
Management Company Private Limited. UTI Mutual Fund remains the largest
fund in the country with assets of over Rs.35,028 crore under management
as of Aug 2006.
In 2003, UTI was divided into two parts, UTI Mutual Fund (UTI MF) and a
specified undertaking of UTI or UTI-I. UTI MF was brought under SEBI
regulations while UTI-I was kept under direct government control since
its schemes offered guaranteed returns.