What is redeemable debenture?

A redeemable debenture is a written agreement about a loan that must be repaid by a set time. Redeemable debenture documents generally include lower rates of interest and lengthier time frames for repayment.

What is a non convertible debenture?

Definition of ‘Non Convertible Debentures’ The debentures which can’t be converted into shares or equities are called non-convertible debentures (or NCDs). Description: Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue.

What is the meaning of convertible debentures?

A convertible debenture is a type of long-term debt issued by a company that can be converted into shares of equity stock after a specified period. Convertible debentures are usually unsecured bonds or loans, often with no underlying collateral backing up the debt.

How safe is non convertible debentures?

Investors must remember NCDs carry a higher credit and liquidity risk than bank deposits. Experts suggest going for secured NCDs to reduce the risk significantly in case of a complete default. Also, allocation should not be over 10\% of one’s fixed income portfolio.

What is the difference between redeemable and irredeemable debentures?

Redeemable debentures carry a specific date of redemption on the certificate. The company is legally bound to repay the principal amount to the debenture holders on that date. On the other hand, irredeemable debentures, also known as perpetual debentures, do not carry any date of redemption.

What is secured debenture?

Secured debentures meaning: bonds that are issued with collateral. The party issuing the bond offers a piece of property or other assets to states and bondholders along with signed permission for those entities to take possession of the collateral if the issuer doesn’t repay the debt.

Is fixed deposit a debenture or loan?

Fixed deposits are a type of product offered by a bank with a fixed interest payout. Debentures are unsecured debt instruments issued by businesses to raise capital funding, and with more complex structuring provisions than fixed deposits.

Who should invest in non convertible debentures?

Public/Private Charitable/Religious trusts which are authorized to invest in NCDs. Scientific and /or industrial research organizations; which are authorized to invest in the NCDs. Limited Liability Partnership formed and registered under the provisions of the LLP Act, 2008 (No. 6 of 2009).

What is meant by irredeemable debenture?

In simple terms, an irredeemable debenture is an agreement made between the lender and the borrower, usually with a favourable interest rate. In the case of a company becoming insolvent, the debenture ensures that the lender is first to receive their funds.