NCD Benefits: If you are looking for an investment destination that can give you higher returns than FDs, then NCDs or non convertible debentures can prove to be a good option for this. Here you can get information about it.
What are NCDs – Learn Here
NCDs or non convertible debentures are financial instruments issued by companies. Through this, the purpose of companies is to raise money. Investors get interest at a fixed rate. NCDs are for a fixed tenure. On maturity, investors get their principal amount along with interest. NCDs are debt instruments like bank FDs.
There are two types of NCDs – first know Secured NCDs
Since these NCDs cannot be converted into shares after a stipulated time, they are called non-convertible debentures. There are two types of NCDs. Secured and un-secured. Investing in secured NCDs means that the company is not prone to default. In this the security of the company is there. If the company is not able to pay the investment, then investors can sell their assets and recover their money.
What are unsecured NCDs
Unsecured NCDs do not have security. Hence, it carries a risk as compared to secured. On maturity, the company returns the principal amount of investment along with interest to the investors. By the way, the company can pay the interest on monthly, quarterly and yearly basis. If you do not take interest then on maturity you get your money with principal and interest.
You can sell NCDs like this
NCDs earn more interest than FDs. These can be bought both in physical form and through demat account. You can also sell them. These can be sold through the share market or director transfer. To sell in the share market, you have to convert your debentures into demat first. Then the stockbroker will have to change that you want to sell them. The stock broker finds buyers for you. In direct transfer, you have to find the buyer yourself. This information has to be given to the company.