Non-convertible debentures (NCDs) are debt instruments used by companies to raise money, paying fixed interest and prioritizing debenture holders over shareholders in liquidation. There are various types of debentures including secured and unsecured NCDs, with the latter having a higher risk. Investors must have a PAN and a demat account to invest in NCDs, which are traded on stock exchanges and rated by credit rating agencies.

1. NON CONVERTIBLE DEBENTURES
(NCD)

2. 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

3. Debentures
• 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
V/S
Shares
• 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.

4. Types of Debentures
Convertible Debentures
These debentures are
unsecured bonds that can be
converted to company equity
shares.
Secured NCD
Secured NCDs are backed by
assets hence the default risk is
negligible
Non Convertible Debentures
NCDs are those instruments which
can't be converted into company's
equity shares.
Unsecured NCD
Unsecured NCDs are not
backed by assets. Hence they
entail a higher risk factor.

5. 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

6. 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

7. looking for
higher
security
looking for
regular
interests
aiming to
diversify
portfolio
Suitable
for
Investor
looking for
better
liquidity
having low
risk
appetite

8. 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

9. Intermediary
Services
Getting Started
•
•
•
•
• Voice
• Online through
www.investmentz.co
m
• NSE / BSE Cash
• IPOs / Bonds /
NCD's
• Mutual Funds
PIS approval
Bank A/c opening
Demat A/c opening
Trading A/c opening
Services
of
ACMIIL
Research
Compliance /
Back Office

10. Thank You