Govt introduces bill for more investment flexibility to trusts

The government today introduced a bill in the Lok Sabha to amend a nearly 130-year old 'Indian Trusts Act', aimed at providing greater autonomy and flexibility to trustees to invest funds of their trusts.
The Indian Trusts (Amendment) Bill, 2015 was introduced in the Lower House by Minister of State for Finance Jayant Sinha.
The bill seeks to amend certain sections (20 and 20A) of the Indian Trusts Act, 1882 to empower the Central Government to notify a class of securities, for the purpose of investing trust-money. It also does away with the requirement of case to case approval by the government of "any security".

As per the 'statement of objects and reasons' of the proposed amendment, it also "provides to the trustees greater autonomy and flexibility" to take decisions on investment of trust-money based on their assessment of the risk-return trade off and the relevant provisions of the trust deed.
"It would be consistent with the current economic environment and the present shift from a merit based regulatory regime to a disclosure based regulatory regime".
The bill seeks to enable the Central Government to notify a class of securities for the purpose of investment of trust money by the trustees in "such securities" and it "deletes reference to the outdated and obsolete securities" from the Act.

The 1882 Act provides the law relating to 'private trusts and trustees'.
The Law Commission of India, in its 17th report has, inter alia, recommended for amendment of section 20 and for deletion of the provisions for the securities which have become obsolete.