EVOLVING FINANCIAL TRANSACTIONS AND THE APPLICABILITY OF THE INDIAN TRUSTS ACT, 1882

Over the last few decades, the financial environment in India and abroad has undergone a paradigm shift. Economic transactions have been transformed by new technologies, digital banking, electronic fund transfers, cryptocurrencies, blockchain, peer-to-peer lending, and AI-driven financial platforms. Traditional finance was based on physical assets and direct contracts, while modern systems use digital assets, decentralised structures and more advanced asset management methods. This change has raised major legal issues with respect to ownership rights, liability, fiduciary duties and regulation. The legal frameworks that oversee financial relationships were mainly created at a time when technology had not yet transformed commercial activities. The Indian Trusts Act of 1882 is one such law that was established during colonial India to govern private trusts and outline the rights and responsibilities of parties in fiduciary relationships. This Act sets up a system where one person or entity holds property for another's benefit and requires the trustee to act with loyalty, good faith, and care . However, with the rise of modern financial methods that include digital assets and decentralized systems, we must consider whether the principles and rules in the Indian Trusts Act can sufficiently address today’s financial transactions . While the Act does not specifically mention digital assets or technological finance, its core principles regarding fiduciary relationships and duties remain important. Still, the rise of new financial structures has led to doubts about how well trust law principles apply in these cases. The greater use of technology in finance calls for a look into whether traditional trust law can truly respond to today’s needs or if legal changes are necessary to deal with new legal issues.