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Banking > Basics > Trustee Business


Trustee Business

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.

 

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