Indian Money Review of Different Types of Debentures – Indian Money
A
debenture is a debt instrument which is not backed by any security or
collateral. The security of the debenture is the credit of the Company issuing
the security. Higher the standing of the Company, lower is the interest rate
offered on the debenture. Companies use debentures to raise funds in the medium
or long-term.
There
are hardly any Indian Money complaints since they are experts in sharing financial
knowledge. Let us go through this Indian Money review of different types of debentures.
Types of Debentures
·
Unsecured debentures: As
per Indian Money reviews, unsecured
debentures have no security on assets. They are just like unsecured creditors
and enjoy the same rights as unsecured creditors.
·
Secured debentures: These
debentures enjoy security over the assets of the Company. If the Company
defaults on debenture interest, debenture holders sell assets to recover their
dues.
·
Bearer debentures: You can
purchase bearer debentures for a consideration (sum of money). The coupons for
interest are attached to the debentures. You/bearer can claim interest from the
Company, when it becomes due.
·
Registered debentures: According to Indian Money
Bangalore, if you purchase a registered debenture, your name is entered in
a register. Interest coupons are sent to you/persons whose name is present in
the register.
·
Redeemable debentures: These
debentures are redeemed after a point in time. They are redeemed on
expiry of a certain period.
·
Irredeemable debentures: As per Indian Money review Bangalore, these debentures are not redeemed within the
lifetime of a Company. They are payable only on winding up or on Company
default.
·
Convertible debentures: Convertible
debentures give the holder the right to convert debentures to equity after a
certain time.
·
Zero interest debentures: You don’t
get interest on zero interest debentures. You are compensated by conversion of
the debenture to equity shares after a certain time.
·
First/Second debentures: Interest
payments are paid first to first debenture holders. Then, second debenture
holders get interest payments.
·
Guaranteed debentures: Banks and Government (third parties) guarantee principal and interest
payments.
·
Collateral debentures: A Company
may issue debentures in favor of a bank or a financial institution as
collateral for loans raised.
·
Non convertible debenture (NCD): As per IndianMoney.com Review, NCDs cannot be converted to equity. The investor
gets principal + accumulated interest at maturity.
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