Debentures 101 – The Introductory Guide | HDFC Securities

A debenture is a debt instrument or a type of loan taken by corporates to raise money from the public for the sake of growth and expansion. In returns, the lender (investor) earns a fixed interest rate at specific intervals. By issuing debentures, companies can raise money without diluting their equity share. The prominent types of debentures available for investment in India include

Secured and Unsecured debentures: Secured debentures are backed by collateral, considered less risky and offer lower interest. Unsecured debentures do not have collateral backing, are riskier and provide higher interest.

Convertible and non-convertible debentures: Convertible debentures may be converted to equity shares in future while non-convertible debentures have no options for converting, and may only be redeemed.

Redeemable and non-redeemable debentures: Redeemable debentures have a mixed maturity date on which the company is legally bound to repay the principal investment amount to the investor. Conversely non-redeemable debentures continue for perpetuity until the company goes for liquidation.

Debentures are low risk instruments offering a fixed interest rate. You can invest in them through your trading account.

Also Follow our Social Media Handles on:

Subscribe to HDFC securities channel now for latest updates on stocks, business, trading, IPO & many more. #HDFCSecurities


#HDFCSecurities #Debentures