What are Non Convertible Debentures (NCD) ?
Non Convertible Debenture is a monetary instrument issued by Corporate for specified term to raise fund/ pocket through public
Issue or private placement. This debt instrument cannot be converted into equity. It's a fixed income instrument same as \ bank fixed deposit and can be traded on stock exchanges. Interest can be earned intermittent / intermittent / annually / additive and on maturity lead quantum is paid to the debenture holder.
Benefits of investing in NCDs
NCDs may be an ideal investment as it offers, If one is looking for an investment that generates fixed income periodically.
Refined rate of interest as compared to fixed deposits, postal savings or suchlike investments.
If the bonds are listed, liquidity as one can vend it in the secondary request before its maturity.
If listed bond possibility of capital appreciation i.e. one can vend your bond at a price refined than your cost price in the request.
Features of Non Convertible Debentures
High rate of returns NCDs in the yesterday have offered interest rates which were like engaging as compared to interest on other fixed ‐ income options.
Flexible term the term of NCDs can be anywhere between 2 bits and 20 bits, thereby giving better maturity openings.
Lower credit peril An NCD loses value when interest rate in the system goes up and profit when the interest rate declines. Notwithstanding, when the NCD is held until maturity, one is likely to realize the promised return and the peril due to movement in interest rates is excepted or minimized.
Professionally rated NCDs are rated by honest and professional credit standing agencies.
Easy liquidity NCDs are generally listed securities hence one can vend them in the secondary request before maturity.
Capital appreciation As NCDs are listed securities, it can serve from the oscillations in stock request and may have capital appreciation.
No Levy deduction at source There's no levy deduction at source (TDS TDS) on NCDs offered in DEMAT mode and listed on a stock exchange as per section 193 of the IT Act.
Interest Payout Options One could look at different interest payout options offered by NCDs similar as serial, recurrent, incomplete ‐ recurrent or recurrent interest payments.
Is NCD a Share or a fixed deposit?
NCD is neither a share nor fixed deposit. It's parallel to fixed deposit in the sense that at time of redemption, the return is fixed.
Are NCDs taxable?
Evanesced forms of NCDs aren't taxable.