What is the difference between debenture and fixed deposit

Most of the debentures issued are non convertible debentures. Like Bonds they carry a fixed interest rate and the same is paid at regular intervals or on the payment of principal amount along with it.

Non convertible debentures are listed on the stock exchange. For example, we presently have the non convertible debentures of Muthoot Finance that are currently being offered. These carry a fixed interest rate that is pre-determined. It depends on your own risk taking ability. NCDs are slightly more risky when compared to bank deposits. Fixed deposits on the other hand are far less riskier. Most of the bank deposits are very secure deposits and there is very rare chance of a default.

So far we have not heard of any NCD default as well and they are rather rare in India. On the other hand a TDS is applicable on bank deposits if the interest income exceeds Rs 10, during the financial year. For Quick Alerts. Subscribe Now. For Daily Alerts.

For investment related articles, business news and mutual fund advise. Allow Notifications. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Investing Bonds. Table of Contents Expand. Fixed Deposits. Key Differences. Debentures vs. Fixed Deposits: An Overview Debentures and fixed deposits are two different ways of investing money through relatively low-risk financial instruments.

Key Takeaways Fixed deposits are a type of product offered by a bank with a fixed interest payout. Debentures are unsecured debt instruments issued by businesses to raise capital funding, and with more complex structuring provisions than fixed deposits. The debenture may include fixed or floating interest, and they may be either convertible or nonconvertible. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

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This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Fixed Income Essentials Debenture vs. Bond: What's the Difference?

Fixed Income Essentials Preference Shares vs. Financial Statements Analyzing a bank's financial statements. Partner Links. A debenture is a type of debt issued by governments and corporations that lacks collateral and is therefore dependent on the creditworthiness and reputation of the issuer. Fully Convertible Debenture FCD A fully convertible debenture is a debt security in which the whole value of the debenture is convertible into equity shares at the issuer's notice.

Debenture Redemption Reserve A debenture redemption reserve is a provision that states that any Indian company that issues debentures must create a debenture redemption service.

Embedded Option An embedded option is a component of a financial security that gives the issuer or the holder the right to take a specified action in the future. Rather, they get principal plus interest accrued upon the completion of the term.

They are much more secure than debentures and are issued mostly by government firms. You need to be the querist or approved CAclub expert to take part in this query. Click here to login now. Similar Resolved Queries.

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