Debentures
Debentures are debt instruments issued by companies to raise funds, where investors receive interest and repayment of principal as per the terms and conditions.
Debentures can be secured or unsecured and convertible or non-convertible debentures (NCDs). NCDs are a common form of debentures in India and are widely used by NBFCs across infrastructure, housing and vehicle finance.
The key features of debentures include defined tenures, interest payout schedules, credit ratings and security arrangements that vary by issuer.
Debenture holders are lenders to the company, not owners, so they earn interest without voting rights or a share in profits.
Debenture investments carry issuer and market risks, so investors should consider credit rating, security and repayment terms.
Make Plan For Your Investment
Estimate returns from your debenture investments
Use our bond calculator to find out the expected returns from investments in debentures in India. Provide the inputs to see the final amount.
- Add investment amount
- Provide tenure and coupon frequency
- Set the expected YTM
- See instant results
Disclaimer: This calculator is for illustration purposes only and does not guarantee or represent actual returns.
REASON AND BENEFITS
Regular Interest Income
Debentures pay interest at set intervals as per issue terms, helping investors plan a steady income stream.
Repayment Priority
Debenture holders have priority over shareholders for repayment, in case the issuing company gets liquidated or winds up.
Higher Yield Potential
Secured and unsecured debentures both may offer higher yields than FDs, but the return varies, depending on issuer risk and market conditions.
Portfolio Diversification
Debentures add a fixed-income component to equity-heavy portfolios and are generally less affected by daily stock market movements.
Liquidity Before Maturity
Listed debentures can be sold before maturity at market prices. Investments made through Grip Invest can be sold anytime.
Investor Protection
For listed issues, a SEBI-registered debenture trustee monitors the issuer's compliance and protects debenture holders' interests.
How to Invest?
- Credit Rating: While figuring out how to invest in debentures in India, check the credit ratings assigned by agencies such as CRISIL, ICRA, CARE and India Ratings. They can range from AAA to D, wherein ratings of BBB- and above are generally considered investment-grade, indicating lower default risk.
- Issuer Financials: The financial performance of the issuer, debt levels and repayment track record indicate its ability to pay interest and return principal on time.
- Security Cover: Secured and unsecured debentures differ in their collateral arrangements. Secured debentures have specified assets attached as collateral, while unsecured debentures lack that, which can impact recovery prospects upon default.
- Yield To Maturity (YTM): YTM is the expected return upon maturity. Comparing it with similar assets and market rates can help in assessing whether the yield matches risk.
- Tenure And Liquidity: The tenure and the financial goals of an investor should align when choosing a debenture to invest in. Listed and actively traded debentures may offer easier liquidity, while low-volume issues can be harder to sell.
- Payout Structure: Check the interest frequency, whether the coupon is fixed or floating, and whether the principal is repaid in instalments.
OTHER OFFERINGS
Other Secured Fixed-Income Products By Grip Invest
Corporate Bonds
- Securities issued by corporates & NBFCs
- Up to 14% pre-tax YTM
- Start investing with Rs 1,000
- Exchange listed and credit rated
InvoiceX
- Loans backed by Invoice Discounting
- Up to 14% pre-tax YTM
- Start investing with Rs 1,00,000
- SEBI/RBI complaint and credit rated
LoanX
- Diverse pool of loans from top NBFCs
- Up to 14% pre-tax
- Start investing with Rs 1,00,000
- SEBI/RBI complaint and credit rated
Baskets
- Theme based investing
- Up to 14% pre-tax YTM
- Start investing with Rs 5,000
- SEBI/RBI complaint and credit rated
Corporate FDs
- High Yield Fixed Deposit Investments
- Up to 10% pre-tax
- Start investing with Rs 1,000
- SEBI/RBI compliant and credit rated
For your knowledge
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Market Insights
Latest Update on Debentures Market in India
Mahindra & Mahindra Financial Services raises INR 1,250 cr via NCDs
Mahindra & Mahindra Financial Services, which is one of India’s leading NBFCs, has raised INR 1,250 crore through the allotment of 1.25 lakh secured, rated, listed and redeemable NCDs (non-convertible debentures), having a face value of INR 1 lakh per debenture, issued at par. This was done on a private placement basis, with a fixed coupon rate of 7.95% p.a., and the debentures are proposed to be listed on the Wholesale Debt Market Segment of BSE.
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To help you
Frequently Asked Questions
What is the difference between a bond and a debenture?
What is the difference between shares and debentures?
What are the different types of debentures?
Are NCDs and debentures the same thing?
