Several companies, including IIFL Home Finance, Indiabulls Housing Finance and Edelweiss Financial Services, have announced public issues to raise funds through non-convertible debentures, offering interest rates between 8.25–9.7%.
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At a time when fixed deposit rates are in low single digits, these NCD offerings look lucrative.
Non-convertible debentures(NCDs) are a financial instrument that is used by companies to raise long-term capital. This is done through a public issue.
NCDs are a debt instrument with a fixed tenure and people who invest in these receive regular interest at a certain rate.
Some debentures can be converted into shares after a certain point in time. This is done at the discretion of the owner. However, this is not possible in the case of NCDs. That’s why they are known as non-convertible.
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