Non-convertible Debentures (NCDs)

A non-convertible debenture is a way to raise long-term capital for companies through public issues. Since these debentures lack the option of convertibility, they usually offer higher interest rates compared to convertible debentures.NCDs have a fixed maturity date with higher returns, liquidity, low risk, and tax benefits.

There are two types of NCDs – 

• Secured NCDs are backed by the assets of the company. If the company cannot pay, the investors can claim their debt through the liquidation of assets.
• Unsecured NCDs are riskier as they are not backed by any asset of the company.