ICICI Bank is venturing into the trust space. The country’s second largest bank in terms of turnover, is joining hands with banking and insurance major Fortis to start a trusteeship company. This entity would provide trust services to high net worth individuals (HNIs) who have a net worth upwards of Rs 5 crore. The joint venture hopes to create 20 to 30 trust structures within the first year of its operation.
?There is a growing demand for this kind of service. High net worth individuals are on the rise and moreover the clientele has matured,? says Kanwar Vivek , general manager (investments) of ICICI Bank. Clearly, HNIs are looking at moving their wealth to trusts. Kanwar is bullish about this line of business because he feels trusts can be a good mechanism to address tax and inheritance issues. The latter has been haunting India Inc with the Ambani brothers row and eventual settlement and the ongoing tussle over Priyamvada Birla’s will to name a few.
Family rows apart, philanthropy is gaining ground in boardrooms and there is a growing need for an organised structure to address the charitable concerns of India Inc. Moreover, income from charitable trusts are normally subject to tax exemptions. ?Philanthropy is no longer a small and private affair. Many wealthy individuals are looking at this segment in a big way,? says Rakesh Rawal, national head, wealth management, Anand Rathi Securities.
There is also a growing demand for private trusts. ?A lot of HNIs want to leave endowments for their immediate and extended family members and children. In some cases, they want to address specific issues like children’s education by means of a private trust? says Rawal.
Trusts have been very popular in countries such as the US, where organisations like the US Trust have been around for over a century now.
These organisations serve as manager, executor, and trustee of personal and corporate funds.
?Trust structures gathered momentum in the US because of the prevalance of high estate duties. Hence people started transfering their wealth to trusts and over the years these structures have played an important role in wealth management,? says Rawal.