The Centre is likely to soon facilitate certain trusts to park funds in shares as well as private sector debt instruments with investment grade rating from credit rating agencies.

The Union Cabinet today gave its nod for amending the Indian Trusts Act 1882 to enable the Government to notify a class of securities as eligible for investments by trusts.

The amendment Bill is likely to be introduced in the budget session of Parliament.

Official sources said the Cabinet decision would cover those trusts whose trust deeds do not expressly specify the pattern of investments that should be adopted till the funds are used for the ultimate purpose for which these vehicles were created.

For such trusts, the Centre is likely to specify that the investment pattern spelt out (in January 2005) for non-government provident funds /superannuation funds / gratuity funds could be adopted.

The Cabinet move to approve amendments to the Indian Trust Act comes in the wake of recommendations made by the Law Commission of India.

Already, the Government is looking at allowing non-government provident funds as well as superannuation and gratuity funds to have greater exposure to the stock markets.

It now proposes to revise their investment pattern set down in January 2005 and enhance the existing investment limits. It also proposes to make eligible new instruments where these funds could be invested.

They could in the coming days look at investing in shares of companies figuring in the BSE Sensex and NSE Nifty and in equity-linked schemes of mutual funds regulated by the Securities and Exchange Board of India.

Meanwhile, official sources said the Finance Ministry has received responses on all the proposed changes in investment pattern and was awaiting final nod of the Finance Minister for these changes.