Government to open stock market to trusts

Mumbai: The government is planning an amendment to the Indian Trusts Act to allow all trust funds to invest in securities, including shares and bonds of listed companies, reports quoting finance ministry sources said.

The amendment will be moved in Parliament in the next session to enable the government notify a class of securities as eligible for investment by trusts, according to a government statement issued after the meeting of the union cabinet.

Following the amendment, all trusts set up under the Act, including private and public trusts like educational trusts, would be eligible to invest in shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities.

This would release thousands of crores of funds, currently invested in risk-free bank deposits, into the stock markets.

The trusts are already allowed to invest in units issued by the Unit Trust of India (UTI) under any unit scheme. The government had allowed trusts to invest in securities on a case by case basis. This practice would now be done away with.