The government on Thursday introduced the Indian Trust (Amendment) Bill, 2015, in the Lok Sabha. The bill seeks to amend the Indian Trusts Act, 1882, and remove its outdated provisions.
The new bill allows a trustee to invest money of the trust in government securities in case the trust property consists of funds which cannot be used immediately or at an early date for the purpose of the trust. The securities may include bonds and debentures guaranteed by the government and mortgages.
The Bill proposes changes in Sections 20 and 20A of the Indian Trusts Act of 1882. Section 20 deals with the investment of trust money and restricts the trustees to investing this money only in the prescribed securities including “promissory notes, debentures, stock or other securities of any state government or of the central government or of the United Kingdom of Great Britain and Ireland ”.
A cursory reading of the section shows that many of the provisions that were introduced during British rule have not yet been repealed. Section 20A prescribes the limits of the power of the trustee to purchase redeemable stock at a premium.
The amendments aim at provide the trustees greater autonomy and flexibility to take decisions on investment of trust money. This would enable the Government to notify securities or class of securities, for investment by trusts and to remove the outdated provisions.
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