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ARTICLE · 19 APRIL 2021

Non-Convertible Debentures

Alpha Partners
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Non-Convertible Debentures ("NCDs") are essentially debt instruments which have a specified repayment timeline and which cannot be converted into equity.

IndiaFinance and Banking
Akshat Pande
Akshat Pande
Richa Bhagat
Richa Bhagat

Part-A: Overview of Non-convertible Debentures

Non-Convertible Debentures ("NCDs") are essentially debt instruments which have a specified repayment timeline and which cannot be converted into equity. NCDs greatly benefit the investors as they offer assured returns, low risk and tax benefits for investors.

NCDs can be issued on a private placement mechanism or a public issue. Now a days private placement mechanism is extensively used for raising funds through NCDs. Most companies (both public and private) and non-banking finance companies (NBFCs) are opting the route of private placement for issuance of NCDs.

Despite the turbulent time in a pandemic induced year and slow business activities, companies have been raising funds through private placement of NCDs. This mechanism is easier for the companies to follow as it provides immediate liquidity to the company raising funds. The traditional method of raising finance through an IPO is a longer and more complex

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