NCD

 There are 2 types of NCD:

Secured NCDs: Secured NCD are backed by company’s assets. In the event of windup of the company, the assets will be sold off against which the NCD was secured and repay the investor.

Unsecured NCDs: Unsecured NCDs are not backed by a company’s assets and are based on creditworthiness of the issuer.

Non-Convertible Debentures (NCDs)

Mix of risk and return profile

Non-convertible debentures are used by companies to raise long-term funds through public issues. Via NCDs, a company agrees to pay a fixed rate of interest on your investment for a specified period.

ALL YOU NEED TO KNOW

Why invest in Non-Convertible Debentures?

Transparent and simple plans for our products to provide safe investing options.

Fixed Income

NCDs provide a fixed rate of interest over a specified period, ensuring a steady income stream for investors.

Liquidity

Some NCDs are listed on stock exchanges and can be bought or sold before maturity, providing an exit option if required.

Short-Term Capital Gains

Short-term capital gains at applicable rates depending on the tax slab you fall into.

Long-Term Capital Gains

Long-term capital gains at 20% with indexation & 10% without indexation.

Credit Rating

NCDs are assigned credit ratings by rating agencies. This rating helps investors evaluate the risk associated with investing in a particular NCD.

Flexibility

The flexibility to pick when you invest provides an option for different frequencies of interest payments which can be annual, monthly, or cumulative.

Tenure: NCD’s tenure can be anywhere between 90 days to 20 years. Investors should choose their tenure based on their financial goals and risk appetite.

Interest payout option: Investor can look at different payout options such as monthly, quarterly, half-yearly and annual interest payment depending on their requirement and investment strategy.

Advantages of investing in NCD's are

Fixed Periodic Income: Helps generate fixed periodic income

Higher returns: Most NCDs provide higher interest rate compared to FD, postal savings and other fixed income instruments.

Easy liquidity: NCDs that are listed can sold in secondary market before its maturity, which provides liquidity to investors. Higher the liquidity, better for investors.

Lower Risk: Only companies with good ratings can issue secured NCD, hence providing low risk to investors.

Capital appreciation: Since NCDs are listed in secondary market, investors can take advantage of fluctuations in stock market, and can sell them at higher cost.

The minimum investment is decided by the issuing company and varies with different issues of NCD. The minimum investment for NCD is usually Rs. 10,000.

Investors cannot withdraw NCD before maturity, but since NCDs are listed securities, investor can sell them in secondary market.

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