The concept of mutual funds is not new in India. UTI started India's first mutual fund in 1964 to mobilize household savings and investing the funds in capital markets. There are many type of mutual funds like equity, debt, balanced etc. SEBI has issued guidelines for the working of mutual funds. There are various risks associated with them but the returns are also high. The growth which accrues by investing in mutual funds is adding to the importance of mutual funds. Association of Mutual Funds (AMFI)has been created in 1995 to maintain professional and healthy environment in the market. Many companies like ABN AMRO, HDFC,UTI,TATA, ICICI are operating in this field. The Indian mutual fund industry has evolved from a single player monopoly in 1964 to a fast growing, competitive market on the back of a strong regulatory framework. The growth in this sector is tremendous and in future it has great prospects. Though, there are certain obstacles in the growth of mutual funds yet, regulatory framework and global competition will certainly improve upon. I Hope that this analysis will definitely contribute to the research by academicians,industry practitioners and students on the topic.