Debentures are long-term debt instruments issued by corporations or governments to raise funds, typically offering fixed interest payments and repayment of the principal amount upon maturity. What is a Debenture? A debenture is a type of long-term debt instrument that a company issues to borrow money from investors. In return, the company promises to pay a fixed rate of interest at regular intervals and return the principal amount on maturity. In simpler words, when you buy a debenture, you’re lending money to the company — and in exchange, you earn interest (also known as a coupon). Debentures are similar to bonds but are typically issued by corporates rather than governments. Types of Debentures Debentures can be categorized on the following basis: A. On the basis of Security: Secured Debentures : Debentures that are issued against a security/collateral are called secured debentures . In other words, a charge is made against the assets of the issuing company. Unsecured Debentures : Debentures which are issued without any charge against the issuing company's assets are called unsecured debentures . B. On the basis of Tenure: Redeemable Debentures : Such debentures ... Learn about debentures , their types, features, and potential risks. Discover how they compare to other bonds and understand their role in corporate and government finance.
