This document provides information on bonds, debentures, and term loans. It defines debentures as a type of debt instrument not backed by physical assets but by the general creditworthiness of the issuer. It outlines the key differences between bonds and debentures. The document discusses the features, types, issuance process, advantages/disadvantages for investors and issuers, and credit ratings of debentures. It defines term loans as debts provided at interest for a set period of time and repaid in regular installments. The purpose, types, features, advantages/disadvantages for companies, and process of term loans are explained.

1. BONDS/DEBENTURES & TERM LOANS
PREPARED BY:
KUNTAL BANERJEE (18BSP0583) ASAWARI BUCHE (18BSP0197)
SANDEEP KOSAMBI (18BSP1028) KRISHNA GAJRA (18BSP0558)
LOKESH PRASAD (18BSP0593) SUSMITA SAHA (18BSP1270)
ARPIT AGARWAL (18BSP0188) MAHIMA PATHAK (18BSP0602)
FINANCIAL MANAGEMENT

2. DEBENTURES
•Debenture: The word ‘debenture’ has been derived from a Latin word
‘debere’ which means to borrow.
•Debenture is a written instrument acknowledging a debt under the
common seal of the company.
•It is a type of debt instrument that is not secured by physical
assets or collateral. Debentures are backed only by the general
creditworthiness and reputation of the issuer.
2

3. DIFFERENCE BETWEEN BONDS &
DEBENTURES
3

4. FEATURES OF DEBENTURES
•Face value.
•Coupon rate.
•Maturity.
•Credit Rating.
•Charge on Assests and
Profits in Case of Default.
4

5. 5

6. TYPES OF DEBENTURE
6

7. ISSUE OF DEBENTURES
•Debentures can be issued at
1. At par :
when debentures are issued by company at a price equal
to nominal value.
2. At discount :
when debentures are issued by company at a price less
than its nominal value.
3. At premium :
when debentures are issued by company at a price more
than its nominal value.
7

8. PROCEDURE FOR ISSUE OF
DEBENTURES:
1. Board meeting.
2. Consent from capital issue & permission from general body.
3. Drafting of prospectus, trust deed and debenture bonds
according to respective guidelines.
4. Filling to registrar of companies.
5. Approval of concerned stock exchange.
6. Issue of prospectus & application.
7. Scrutiny of application.
8. Allotment of debentures.
8

9. 9

10. 10

11. ADVANTAGES & DISADVANTAGES
(INVESTOR’S)
Advantages
• Fixed rate of Interest.
• Less risk.
• Definite Maturity Period.
• Transferable.
Disadvantages
• Fixed return.
• No voting rights.
• Uncertainty in Redemption.
11

12. ADVANTAGES & DISADVANTAGES
(ISSUER’S)
Advantages
• Long Term Funds.
• Fixed Rate of Interest.
• No Dilution in Interest of
Shareholder.
Disadvantages
• High Stamp Duty.
• Disadvantage during
Depression.
• Compulsion of Payment.
12

13. CREDIT RATING
• According to CRISIL, credit rating is “an unbiased and
independent opinion as to issuer’s capacity to meet its
financial obligations. It does not constitute a recommendation
to buy , sell or hold a particular security”
There are four Credit Rating agencies in India :
• CRISIL(Credit Rating Information Services of India Ltd)
• ICRA(Information and Credit Rating Services ltd)
• CARE (Credit Analysis and Research Ltd)
• FITCH India
13

14. CRISIL CREDIT RATING
14

15. TERM LOAN
15
•In finance a loan is a debt provided by one entity
(organization or individual) to another entity at an interest rate,
evidenced by a note, which specifies, among other things, the
principal amount, rate of interest and date of repayment.
•A term loan is a monetary loan that is repaid in regular
repayments over set period of time.

16. PURPOSE OF TERM LOAN
16
Capital
Expenditure
New
Industrial
Undertaking Expansion
of
Existing
One
Acquisition
of
Movable
Assets

17. TYPES OF TERM LOAN
17
• Short Term Loans1
• Intermediate Term
Loans2
• Long Term Loans3

18. 18

19. FEATURES OF TERM LOAN
19
• Security :
Assets which are financed through term loans serve as primary
security and the other assets of the company serve as collateral security.
• Obligation :
Interest payment and repayment of principal on term loans is
obligatory on the part of the borrower.
• Convertibility :
Term loans may be converted into equity at the option and
according to the terms and conditions laid down by the financial institutions.

20. CONTINUE..
20
• Interest :
Term loans carry a fixed rate of interest but this rate is negotiated
between the borrowers and lenders at the time of dispersing of loan.
• Maturity :
Its maturity period lies between 5 to 10 years and repayment is made
in instalments.

21. ADVANTAGES & DISADVANTAGES
(Company’s Perspective)
Advantages
•Secured
•Regular Income
•Flexible
•Conversion
Disadvantages
•Negotiability
•Control
21

22. 22
PROCESS OF TERM LOAN
Submission of
Loan
Application
Initial
Processing of
Loan
Application
Appraisal of the
Proposed
Project
Issue of Letter
of Sanction
Acceptance of
T&Cs
Execution of
Loan
Aggrement
Creation of
Security
Disbursement
of Loans
Monitoring

23. SANDEEP KOSAMBI (201403100920021). SMART STORAGE SYSTEM, CGPIT,MAY 2016 23
THANK YOU

24. 24