NCD, or Non-Convertible Debentures, are a type of debt instrument issued by companies, financial institutions, and other organizations to raise capital. They are similar to bonds, but unlike bonds, NCDs cannot be converted into equity shares of the issuing company. Instead, NCDs offer fixed returns in the form of interest payments, which are typically paid semi-annually.
NCDs are typically issued for periods ranging from 1 to 10 years and are listed and traded on stock exchanges, making them easily accessible to a wide range of investors. The interest rate on NCDs is higher than the interest rate on traditional fixed deposits, making them an attractive option for investors seeking higher returns. However, NCDs also come with a higher level of risk, as they are subject to fluctuations in interest rates and the creditworthiness of the issuing company.