"This would enable the central government to notify securities, or class of securities, for investment by trusts and to remove the outdated provisions occurring in section 20 of the Indian Trusts Act, 1882," a cabinet communique said.

"The amendments are intended to provide the trustees greater autonomy and flexibility to take decisions on investment of trust money," it added.

The Indian Trusts (Amendment) Bill, 2014, cleared for introduction during the ongoing session of Parliament, would pave the way for state-run pension fund, the  Employees' Provident Fund Organisation (EPFO), to put money into equities so far, EPFO is not allowed to invest in securities not backed by the government.

The previous UPA government had introduced a bill for amendments in 2009, but the legislation lapsed, although the Murli Manohar Joshi-led parliamentary committee had given its approval.

It seeks to do away with the requirement of case-by-case government approval of the securities in which trust money can be invested.

According to the Finance Ministry, the object of the legal changes is to enable trusts to make their own investment decisions without any explicit or implicit government guarantee on the credit-worthiness of securities or debt instruments.

The move comes at a time when attractive returns have drawn major foreign pension funds to the Indian stock markets.

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