Money and Banking (part – II)

The Securities and Exchange Board of India (SEBI) was established as a non-statutory body in 1988. It was constituted as a statutory body on April 12, 1992, in accordance with the provisions of the SEBI Act, 1992. It is headquartered in Mumbai. Its regional offices are located in Kolkata, Delhi and Chennai. SEBI is primarily set up to protect the investors in securities market (share market/stock exchange) and to promote and development of and to regulate the securities market for the matters connected therewith or incidental thereto. Mutual funds are also regulated and monitored by the SEBI, which strives to protect the interest of investors.

The Securities and Exchange Board of India (SEBI) was established as a non-statutory body in 1988. It was constituted as a statutory body on April 12, 1992, in accordance with the provisions of the SEBI Act, 1992. It is headquartered in Mumbai. Its regional offices are located in Kolkata, Delhi and Chennai. SEBI is primarily set up to protect the investors in securities market (share market/stock exchange) and to promote and development of and to regulate the securities market for the matters connected therewith or incidental thereto. Mutual funds are also regulated and monitored by the SEBI, which strives to protect the interest of investors.

The Securities and Exchange Board of India (SEBI) was established as a non-statutory body in 1988. It was constituted as a statutory body on April 12, 1992, in accordance with the provisions of the SEBI Act, 1992. It is headquartered in Mumbai. Its regional offices are located in Kolkata, Delhi and Chennai. SEBI is primarily set up to protect the investors in securities market (share market/stock exchange) and to promote and development of and to regulate the securities market for the matters connected therewith or incidental thereto. Mutual funds are also regulated and monitored by the SEBI, which strives to protect the interest of investors.

The Securities and Exchange Board of India (SEBI) was established as a non-statutory body in 1988. It was constituted as a statutory body on April 12, 1992, in accordance with the provisions of the SEBI Act, 1992. It is headquartered in Mumbai. Its regional offices are located in Kolkata, Delhi and Chennai. SEBI is primarily set up to protect the investors in securities market (share market/stock exchange) and to promote and development of and to regulate the securities market for the matters connected therewith or incidental thereto. Mutual funds are also regulated and monitored by the SEBI, which strives to protect the interest of investors.

The Securities and Exchange Board of India (SEBI) was established as a non-statutory body in 1988. It was constituted as a statutory body on April 12, 1992, in accordance with the provisions of the SEBI Act, 1992. It is headquartered in Mumbai. Its regional offices are located in Kolkata, Delhi and Chennai. SEBI is primarily set up to protect the investors in securities market (share market/stock exchange) and to promote and development of and to regulate the securities market for the matters connected therewith or incidental thereto. Mutual funds are also regulated and monitored by the SEBI, which strives to protect the interest of investors.

The Securities and Exchange Board of India (SEBI) was established as a non-statutory body in 1988. It was constituted as a statutory body on April 12, 1992, in accordance with the provisions of the SEBI Act, 1992. It is headquartered in Mumbai. Its regional offices are located in Kolkata, Delhi and Chennai. SEBI is primarily set up to protect the investors in securities market (share market/stock exchange) and to promote and development of and to regulate the securities market for the matters connected therewith or incidental thereto. Mutual funds are also regulated and monitored by the SEBI, which strives to protect the interest of investors.

The mutual fund industry in India started in 1964 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank of India.

Unit Trust of India (UTI) was established on 1 February, 1964 under the UTI Act, 1963 of the Parliament. It was set up by the Reserve Bank of India and functioned under the of share regulatory and administrative control of the Reserve Bank of India. In 1978, UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme (US) 1964. 1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June, 1987. LIC established its mutual fund in June, 1989 while GIC had set up its mutual fund in December, 1990.

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Funds Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July, 1993.

The 1993 SEBI (Mutual Funds) Regulations were substituted by a more comprehensive and revised Mutual Funds Regulations in 1996. The industry now functions under the SEBI (Mutual Funds) Regulations, 1996. In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI was bifurcated into two separate entities : One is the Specified Undertaking of the Unit Trust of India. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Funds Regulations.

The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Funds Regulations.

In 1998, media reports appeared claiming that things were seriously wrong with UTI's Unit Scheme (US)-64. For the first time in its 32 years of existence, US-64 faced depleting funds and redemptions exceeded sales. Between July, 1995 and March, 1996, funds declined by Rs. 3,104 crore.

An ICFAI case study quoted analysts as saying that the depleting corpus coupled with the redemptions could soon result in a liquidity crisis.

Soon, reports regarding the lack of proper fund management and internal control systems at UTI added to the growing investor frenzy. By October 1998, US-64's equity component's market value had come down to Rs. 4,200 crore from its acquisition price of Rs. 8,200 crore. The net asset value (NAV) of US-64 also declined significantly during 1993-1996 due to turbulent stock market conditions. One survey citied US- 64's NAV at Rs. 9.68. The US-64 units, which were sold at Rs. 14.55 and repurchased at Rs. 14.25 in October 1998, thus were around 50% and 47%, above their estimated NAV.

The Unit Trust of India (UTI) was set up on February 1, 1964 to promote and pool the small savings from the lower and middle class income person those who cannot have direct access to the stock exchange. It also provides them with an opportunity to share the benefits of prosperity resulting in rapid industrialization in India. On 1 February, 2003, UTI was bifurcated into two separate entities. One is representing broadly, the assets of US64 scheme, assured return and certain other schemes. The second is the UTI mutual fund, sponsored by SBI, PNB, BOB and LIC. It is registered with the SEBI and functions under the mutual fund regulations. Hence, option (d) is the correct answer.

As per the question period, Unit Trust of India was the largest mutual fund organization in India. At present, SBI Mutual Fund is the largest mutual fund organization in India (in terms of AUM-assets under management ) with references to Asset Management Companies .