NON CONVERTIBLE DEBENTURES(NCD)

What are Debentures?• Debenture is a debt instrument which is used by companies to

borrow money from general public.

• Most debentures pay a FIXED rate of interest/ Coupon

Debentures

SharesV/S

• Debenture holders are creditors of the company

• Debenture holders get interest irrespective of

profit or loss

• Convertible debentures can be converted into equity

shares

• Debentures will get priority is getting the money back

as compared to shareholder in case of liquidation of a

company

• Shareholders are the owners of the company

• Shareholder get a portion of the profits called dividend subject to

director’s declaration

• Shares cannot be converted into debentures

• In case of liquidation of company, equity

shareholders get their money back after settling all statutory expenses and

creditors.

Types of Debentures

Convertible Debentures

Non Convertible Debentures

These debentures are unsecured bonds that can be converted to company

equity shares.

NCDs are those instruments which can't be converted into

company's equity shares.

Secured NCD Unsecured NCD

Secured NCDs are backed by assets hence the default risk

is negligible

Unsecured NCDs are not backed by assets. Hence they entail a higher risk

factor.

Advantages

• Higher Liquidity

• Fixed Interest

• Better Safety*

• No Tax Deducted at source (TDS)

• Rated by credit rating agencies

• NCDs are traded on Stock Exchanges

• Available in Demat format

• Interest get paid ECS / RTGS / NEFT/ Direct Credit mode

Points to remember

1. Face value : Value printed on the instrument

2. Coupon Rate: Rate of interest

3. Redemption : Repayment of instrument

4. Market Price : Value at which instrument is traded

5. Rating : Credit rating agencies rating.

6. Tenure : Validity of debenture in years

7. Yield : Annual returns of investment Instrument per year in percentage

looking for higher

security

looking for better

liquidity

looking for regular

interests

aiming to diversify portfolio

having low risk appetite

Suitable for

Investor

Make sure you have..

PAN : As per SEBI guidelines, it’s essential to have a permanent account number to invest in debentures.

Demat A/C : NCDs are compulsorily issued in a dematerialized format, hence you should have a Demat A/C

Services of

ACMIIL

Getting Started• PIS approval• Bank A/c opening• Demat A/c opening• Trading A/c opening

Intermediary Services

• Voice• Online through

www.investmentz.com

• NSE / BSE Cash• IPOs / Bonds /

NCD's• Mutual Funds

Research

Compliance / Back Office

Thank You