When a bank considers a Trust as a borrower, which legal provision or characteristic primarily dictates the extent of the trustees' power to mortgage trust property as security for a loan, and what is the consequence if this power is not explicitly mentioned?

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Current Affairs · Banking Law and Credit Operations

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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The Trust Deed must explicitly provide the power to borrow and mortgage; otherwise, the trustees must obtain a court order.

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Answer 1

The Public Trusts Act of the respective state automatically grants borrowing powers to all registered religious trusts.

Answer 2

Trustees have a joint and several liability which overrides the need for explicit mention in the Trust Deed.

Answer 3

The Trust Deed must explicitly provide the power to borrow and mortgage; otherwise, the trustees must obtain a court order.

Answer 4

The Indian Trusts Act, 1882, implies an inherent power to mortgage for the benefit of the trust.

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