Investors want investment options that manage liquidity and risks while offering substantial returns. Debentures are long-term financial instruments issued by a company for specified tenure with a promise to pay fixed interest to the investor. Debentures are of two types, namely convertible debentures and non-convertible debentures (NCD).Non-convertible debentures (NCD) are those which cannot be converted into shares or equities. NCD interest rates depend on the company issuing the NCD.

NCDs are issued by corporates to raise funds from the public and offer a fixed return . This is done through a public issue and subsequently traded either over the counter (OTC) or on exchanges.

Ratings of NCDs issued reflect the position of the issuer in servicing its financial obligations i.e. to pay interest when due and also about the payment of the maturity proceeds on time.

NCDs offer various other benefits to the owner such as high liquidity through stock market listing, tax exemptions at source and safety since they can be issued by companies which have a good credit rating as specified in the norms laid down by RBI for the issue of NCDs.