Trusteeship at a Crossroads: Why Regulation Is Key

Outdated and inconsistent laws expose the trustee services ecosystem to asset risks

- Tanmay Patnaik

India's wealth management ecosystem is rapidly evolving, with institutional trustees playing a key role in safeguarding assets, enabling succession, and ensuring fiduciary compliance. However, the regulatory framework governing them remains fragmented and outdated, exposing the system to significant risks. With wealth under trusteeship estimated in tens of thousands of crores, there is a pressing need for robust, uniform regulations to protect stakeholders and support sustainable growth.

Currently, institutional trustee services are mainly governed by two statutes: (i) The Indian Trusts Act, 1882, which sets out rules for private trusts, and (ii) SEBI (Debenture Trustee) Regulations, 1993, covering debenture trustees. But there is no unified regulation or certification regime for all institutional trustees, especially those operating beyond the securities space. This gap creates inconsistencies and serious risks, affecting the integrity of the wider wealth management framework.