Non-Convertible Debentures

NCD stands for "Non-Convertible Debentures." They are fixed-income instruments issued by corporations to raise long-term funds from the market. Here's a breakdown of key points:

  1. Nature: NCDs are debt instruments where investors lend money to the issuing company for a fixed tenure at a predetermined interest rate. They are non-convertible, meaning they cannot be converted into equity shares of the issuing company.
  2. Interest Payments: NCDs offer fixed or floating interest rates, typically paid periodically (quarterly, semi-annually, or annually). The interest rate is predetermined and remains fixed for the duration of the NCD.
  3. Maturity Period: They have a specific maturity period, ranging from a few months to several years. At the end of the maturity period, the issuing company repays the principal amount to the investors.
  4. Risk and Rating: NCDs carry varying levels of risk depending on the credit rating of the issuing company. Higher-rated NCDs are considered safer investments, while lower-rated ones may offer higher returns but come with increased risk.