InvestorQ : What are non-convertible debentures?
Mary Joseph made post

What are non-convertible debentures?

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Ayushi Kampani answered.
1 year ago

Non-convertible debentures (NCDs) are long-term financial instruments that are fixed-income investments. They are used as tools to raise long-term capital by companies through public NCD issuance.

In lieu of the money companies borrow, they repay the amount to investors at a pre-defined rate of interest at the end of the tenure. Thus, an NCD is in many ways similar to a bank’s fixed deposit (FD), but it gives better returns than banks FDs.

While some debentures can be converted to shares after a particular point, at the sole discretion of the owner, the debentures that cannot be converted into shares or equities are called NCDs. However, investors who have invested in NCDs enjoy significantly higher returns, low risk and tax respite.