Why do company issue debenture instead of shares.

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Why Debentures
and not Shares?

2. Why Debentures? Company’s View
Company Needs funds? 500 Crs
Options:
Share Issue to Public
Bank Loan
Loan from Public
Fixed Denomination of Rs.100,1000,10000,
Also called Bonds
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3. Fresh issue of share
Fresh issue of share would lead to dilution of ownership.
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4. Bank Loan comes with restriction
Bank borrowings comes with it’s restriction :
How these funds can be used. ex- only for purchasing new
machine.
Limits future borrowings .ex- future borrowings can be done only
existing debt is paid
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NSC - 8.5%p.a
Fixed Deposit with Bank ICICI-9%p.a
Debentures - 11-13% p.a
Why Debentures? Investor’s View

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