Under section 3 of Indian Trusts
Act, 1882 a trust is an obligation annexed to the ownership of property, and arising out
of a confidence reposed in and accepted by the owner, or declared and accepted by him, for
the benefit of another, or of another and the owner.
Banks also act as trustees for
various requirements of the corporates, Government and General Public. 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. Banks are the natural
choice. For general public also the Banks normally have a facility called "safe
custody" where Banks act as trustees.
Banks also act as bankers to trustees
appointed under the act mentioned above. A banker has a few special obligations in such
accounts and accordingly special care is taken in such accounts.