Banks also act as trustees for various purposes. For example, whenever a company wishes to
issue secured debentures, it has to appoint a financial intermediary as trustee who takes
charge of the security for the debenture and looks after the interests of the debenture
holders. Such entity necessarily have to have expertise in financial matters and also be
of sufficient standing in the market/society to generate confidence in the minds of
potential subscribers to the debenture. While Banks are the natural choice for the
customers, Banks must possess the following to be effective and retain that:
A track record of sufficient length.
Facilities for safe keeping.
Legal skills to take necessary steps for the trusteeship.