Lok Sabha passes bill to amend Indian Trusts Act, amid Congress protests

NEW DELHI: A Bill to amend the "archaic" Indian Trusts Act, 1882, that will provide greater autonomy to trustees and allow them to invest trust funds in securities notified by the government, was passed by the Lok Sabha today.

The Indian Trusts (Amendment) Bill, 2015, was passed by a voice vote amid continued protests by the Congress members, who were in the Well raising slogans throughout the discussion on the Bill. They also opposed taking it up for passage, citing that the House was not in order.

Moving the bill for passage, Minister of State for Finance Jayant Sinha said the 1882 Act was a "relic of the colonial past". Sections 20 and 20A needed to be amended to allow trustees to invest trust funds in securities and bonds notified by the government, he said.

Section 20 deals with the investment of trust money and restricts the trustees to investing only in the prescribed securities, including promissory notes, debentures, stock or other securities of any state government or central government or of the United Kingdom of Britain and Ireland.

Section 20A lists the limits of the power of the trustee to purchase redeemable stock at a premium.

"These provisions have been archaic .... Time has come to remove the archaic provision and replace them with modern rules," Sinha said.

The Minister said the Bill would give greater autonomy and flexibility to trustees in deciding on investment on trust money. "Through this Bill, the Indian Trust Act will be ready for the 21st century," Sinha noted.

In December 2014, Cabinet had approved the amendments to enable the central government to notify securities or class of securities for investment by trusts.

However, Parliamentary Affairs Minister Venkaiah Naidu said functioning of the Parliament cannot be disrupted and people of the country want the legislation.

Participating in the discussion, several members voiced concern over the use of trust money. While some said they at times became parking place for black money, others demanded that the funds be utilised for social sector spending and towards investments in railways.