Debenture is the loan or debt instrument which is issued by Government and Corporates to raise the fund. Debenture are issued on fixed interest rate. Their value is based on credit rating. Based on credit rating people will purchase the debentures. Debenture holders are the creditors to the company and they get interest on their investment in the company.

Types of debentures

Secured debentures: secured debentures are backed by the assets security. They are like mortgage loan. For such debenture particular assets will be act as security.

Unsecured debenture: Unsecured debenture are not secured by any assets they are purchased based on companies credit worthiness and reputation.

Convertible debentures: Convertible debentures are the Debentures which allow to convert to Equity shar. Where debentures holder will become equity share holder.

Non Convertible debentures : Non Convertible debentures are the Debentures where it is not possible to convert it into equity share.

Redeemable debentures : in this types of debentures the time of repayment of loan is mentioned and when investor can get back his invested money is mentioned.

Irredeemable debentures : The debentures will not have time of repayment. These are long term debentures. These are repayable at the time of liquidation.