Quick Answer: What Is A Specific Debenture?

What is an example of a debenture?

The definition of a debenture is a long-term bond issued by a company, or an unsecured loan that a company issues without a pledge of assets.

An interest-bearing bond issued by a power company is an example of a debenture..

What are the main features of debenture?

The most salient features of Debentures are as follows:A debenture acknowledges a debt.It is in the form of certificate issued under the seal of the company (called Debenture Deed). … It has a rate of interest & date of interest payment.Debentures can be secured against the assets of the company or may be unsecured.More items…•

How do I apply for a debenture?

You need to have the usual trading and a demat account to buy a non convertible debenture (NCD). The process to buy a NCD is the same as that for a share. You log into your trading account or ask your broker to buy you an NCD on your behalf. The manner in which you buy and the brokerage is the same as that for shares.

What is Debenture simple words?

A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.

Are debentures current liabilities?

Noncurrent liabilities include debentures, long-term loans, bonds payable, deferred tax liabilities, long-term lease obligations, and pension benefit obligations. The portion of a bond liability that will not be paid within the upcoming year is classified as a noncurrent liability.

Is debenture a loan?

In the United States, a debenture is a loan that is backed by the full faith and credit of the issuer. This means that, in the US at least, a debenture is a type of Unsecured Loan, with the high creditworthiness of the borrower prompting the lender to make the loan.

What is the difference between a debenture and a loan?

In debenture, the public lends its money to the company in return for a certificate promising a fixed rate of interest. In loans, the lending institutions are banks and other financial institutions.

What is a debenture seat?

A Debenture entitles the holder to receive a ticket for each day of the tournament. The Debenture holders can sell their excess tickets to you, the end user of the ticket. Debenture seats all have fantastic ‘club level’ viewing, situated at the level of the Royal Box.

Is a debenture bad?

Debentures – good or bad? In essence, debentures are a necessary evil of raising money for a business. Some lenders won’t lend above a certain amount without a debenture, so regardless of how much you’re looking to borrow, you should be prepared to offer up your assets as security.

Is a debenture an asset?

The debenture is sometimes called a ‘floating charge debenture’ and includes all company assets. … The debenture secures the assets for the lender should the company fail and in liquidation, the charge becomes ‘fixed’ on the asset’s value at that point in time.

What are the risk of debentures?

The main risk that fixed-rate debentures and unsecured notes holders are exposed to is the opportunity cost that a better rate of return may be available elsewhere if interest rates were to increase. The credit risk is the risk that the investor’s interest and/or capital are not repaid by the borrower.

Where can I buy debentures?

Non-convertible debentures are offered by companies through an open issue. Investors can buy the same in the primary market when the issue is open. They can also choose to purchase NCDs being traded on the stock market at a later point in time.

What are debentures used for?

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.

Why do companies issue debentures?

Why do company issue debentures, when they can borrow money from Bank. … When bank lend money they generally place restriction on how that money can be used. ex- borrowed fund can be used only for capital expenditure or they limit companies ability to raise additional funds till this loan is repaid. etc.

What is a single debenture?

A debenture is a document issued by a company containing an acknowledgment of its indebtedness whether charged on the company’s assets or not. There are three main types of debentures: a single debenture e.g. a company obtains a secured loan or overdraft facility. debentures issued as a series and usually registered.

What is a debenture and how does it work?

A debenture is an agreement between a business and its lender enabling the lender to put a charge on the business’s assets. Debentures are a feature of secured lending, where assets are put up as collateral. … The term debenture essentially refers to the document itself, which is filed with Companies House.

What is debenture and its types?

Debentures are a debt instrument used by companies and government to issue the loan. … Companies use debentures when they need to borrow the money at a fixed rate of interest for its expansion. Secured and Unsecured, Registered and Bearer, Convertible and Non-Convertible, First and Second are four types of Debentures.

What is the difference between share and debenture?

Shares and debentures both are ways to raise capital however debentures are borrowed capital whereas shares are a portion of the company’s capital itself.