In simple terms, a bond is loan from an investor to a borrower such as a company or government. The borrower uses the money to fund its operations, and the investor receives interest on the investment. The market value of a bond can change over time.

Bonds are issued by governments and corporations when they want to raise money. By buying a bond, you're giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interestopens a layerlayer closed payments along the way, usually twice a year.

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.

Why is it called non-convertible?

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.

Even though NCDs cannot be converted into shares, they offer other benefits.