Economy of a country is highly influenced by its financial system which consists of financial intermediaries, financial markets, financial instruments and financial assets. The financial system facilitates transformation of savings of individuals, business and government in to consumption and investment in the society. The role of financial intermediary helps to realize the opportunities for savings and real investments in the economy as a mediator between savers and borrowers. An institutional set up of financial intermediaries is required to mobilize the savings of the society and investing rationally to make the economy conducive to further generation of savings and mobilization of resources at a subsequent stage. The financial intermediaries of the Indian financial system are Banks, Insurance Companies, LIC, Financial Institutions, Mutual Funds, Financial Companies, etc. Mutual funds is the right choice for small investors and there is no better alternative which can provide benefits of expertise and ability of investment research.