CORPORATE DEBENTURE :

A Debenture is a debt security issued by a company, which offers to pay interest in lieu of the money borrowed for a certain period. In essence it represents a loan taken by the issuer who pays an agreed rate of interest during the lifetime of the instrument and repays the principal normally, unless otherwise agreed, on maturity.

These are long-term debt instruments issued by private sector companies, in denominations as low as ` 1000 and have maturities ranging between one and ten years. Debentures enable investors to reap the dual benefits of adequate security and good returns. Unlike other fixed income instruments such as Fixed Deposits, Bank Deposits, Debentures can be transferred from one party to another.

Debentures can be divided into different categories on the basis of convertibility of the instrument and Security.

The debentures issued on the basis of Security includes –

– Non-Convertible Debentures (NCDs)

– Partly Convertible Debentures (PCDs)

– Fully convertible Debentures (FCDs)

– Optionally Convertible Debentures (OCDs)

– Secured Debentures

– Unsecured Debentures