What is a Non-Convertible Debenture or NCD?

NCDs or Non-convertible Debentures are a fixed-income debt instruments issued by companies to raise capital. The issuer company makes regular interest payout on NCDs that can be either monthly, quarterly or annually. Since NCDs are issued for a fixed tenure, on maturity, the investor will be repaid with the principal amount.

Any collateral security does not back NCDs and the interest payout depends upon the company’s creditworthiness. NCD issues by companies with good credit ratings is considered safe than others. Since NCDs are non-convertible debt instruments, it cannot be converted into equity stocks.