Debenture

Key Highlights

• A debenture is a type of debt instrument that is not backed by any collateral and is typically used by large corporations to raise capital.

• In India, debentures can be issued either through a public issue or a private placement.

What is Debenture?

A debenture is a type of debt instrument that is not backed by any collateral and is typically used by large corporations to raise capital. Debentures are generally unsecured, which means that they carry a higher risk than secured loans, but they also tend to offer higher interest rates.

How Debentures are Issued?

In India, debentures can be issued either through a public issue or a private placement. A public issue is an offer of debentures to the general public through advertisement, whereas a private placement is an offer of debentures to a select group of people. In India, debentures are generally secured against the assets of the company. However, unsecured debentures can also be issued by companies.

Difference Between Share and Debenture

Shares give investors a stake in a company, while debentures are more like loans. The key difference between the two is that shares are considered equity, while debentures are debt. Equity is an ownership stake in a company, while debt is money that must be repaid with interest.