1 / 6

Types of Non-Convertible Debentures and Their Features

Non-convertible debentures offer a range of investment options with varying features, such as fixed or floating rates, secured or unsecured status, and different maturity periods. Understanding the types of non-convertible debentures helps investors choose the right product based on their risk appetite and investment goals, providing opportunities for stable returns and financial security.<br>

kavitapodar
Download Presentation

Types of Non-Convertible Debentures and Their Features

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Types of Non-Convertible Debentures and Their Features

  2. Non-convertible debentures (NCDs) are popular investment options that offer fixed returns without the option to convert into company shares. Understanding the different types of NCDs and their features is essential for investors seeking secure, long-term investment opportunities. This guide will provide an overview of the various types of NCDs and the key features that distinguish them.

  3. What are the Types of NCD • Secured NCDs • These debentures are backed by the company’s assets as collateral. In case of default, investors can claim the assets to recover their investment, making secured NCDs a safer option with relatively lower risk. • Unsecured NCDs • These debentures are not backed by any collateral. Investors rely solely on the company’s creditworthiness. While they offer higher interest rates, they also carry a higher risk compared to secured NCDs.

  4. Features of Non-Convertible Debentures • Fixed Interest Rate • Non-convertible debentures (NCDs) offer a fixed interest rate, providing investors with predictable returns over the tenure of the debenture. • No Conversion to Equity • Unlike convertible debentures, NCDs cannot be converted into company shares, meaning investors receive their returns in the form of interest payments without owning any equity. • Tenure • NCDs typically come with fixed tenures ranging from 1 to 10 years, offering both short-term and long-term investment options.

  5. Credit Rating • NCDs are often rated by credit rating agencies, helping investors assess the risk involved. Higher-rated NCDs generally offer lower interest rates due to lower risk. • Tradability • Some NCDs are listed on stock exchanges, allowing investors to buy or sell them before maturity, offering liquidity in addition to fixed returns. • Tax Treatment • Interest earned on NCDs is taxable based on the investor’s income tax bracket, and the tax treatment may vary depending on whether the NCD is listed or unlisted.

  6. Conclusion • Non-convertible debentures offer a range of investment options with varying features, such as fixed or floating rates, secured or unsecured status, and different maturity periods. Understanding the types of non-convertible debentures helps investors choose the right product based on their risk appetite and investment goals, providing opportunities for stable returns and financial security.

More Related