IAHRW International Journal of Social Sciences Review

Subhendu Bhattacharya ¹, Kitty Sandeep Rana ¹

Affiliations
1 Amity Global Business School, Mumbai, Maharashtra, IN

Abstract

In the financial market cluttered with numerous types of investible financial instruments, Non Convertible Debentures (NCDs) stands out with its distinctive attributes. NCDs falls into debt category segment which is issued by Corporate to raise funds from market. In the time of volatility in financial market NCDs proves to be a dark horse as they provide steady returns in the long run which could be a safer bet. Barring all traditional corporate FDs NCDs are regarded as fixed income investment with specific tenure and interest income. It doesn't have the liberty to be converted into equities but at times it is a better option for an investor as it provides better return, higher liquidity, low risk and tax relief. NCDs are assessed by credit rating agencies which provide prior indication about default risk of the debt asset. The interest rate offered by NCDs is far better than traditional bank FDs which is very popular among the retail investor in India. It is referred that NCDs work as lucrative investment option for the investors who falls into 10% to 20% tax brackets although TDS is not charged for registered NCDs. NCDs are issued in primary market and later on traded in the secondary market which provides higher liquidity and availability. Now a day's NRIs are also allowed to invest in NCDs. The tenure for NCDs ranges from 1 year to 10 years and mostly new NCDs offer higher rate of interest then the existing ones. As the tenure gets longer the yield also becomes higher for NCDs.

Keywords

NCDs, Coupon Rate, Tenure, Debentures, Credit Rate, Financial Asset, Investment Avenues.

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