• NCD issue means Non-Convertible Debenture public issue. NCD is a Secured and Redeemable Corporate Bond, a bond issued by a corporation to raise money from the capital market. Unlike equity shares, bondholders do not have any ownership interest in the company. They are also known as securities that do not have any equity element attached to it. NCD are tradable instruments. They are listed with major stock exchanges (BSE and NSE) in India.
• When one buys a corporate bond, one lends money to the company. In exchange, the company promises to return the money on a specified maturity date along with a stated rate of interest.
• Corporate bonds are debt securities. They are considered as a long-term investment option. The maturity period of these securities ranges from 1 year to 20 years.
The NCD issue process is similar to the IPO process. Investors apply for NCD shares through a broker. Based on the subscription, they receive the number of NCD shares. The NCD's are credited to the demat account and the money gets deducted from the trading/bank account.
Types of NCD's:
Non-Convertible Debentures are basically divided into two types: Secured and unsecured NCD.
1. Secured NCD
It means investor is on the safer side. They will provide assurance on repayment up to some extent if the company defaults.
2. Unsecured NCD
Unsecured debt offers a higher rate of returns than the counterpart. Unsecured NCD's involve comparatively higher risk over repayment when the company defaults
SEBI had allowed to apply retail investors under UPI mechanism amount up to Rs 2 lakhs vide their circular ref: SEBI/HO/DDHS/CIR/P/2020/233 DATED: November 23.2020.
Process to Apply through SSL Online platform is as under:
• Visit to our web site, Click on Apply NCD.
• Select NCD and scheme - Fill no of NCD’s to apply. Submit the order.
• You will receive notification in your BHIM UPI App or Any Other UPI App ( preferably use BHIM App for creating your UPI ID )
• Once you accept the notification, your transaction get validate for allotment of NCD’s.
• Allotment day if allotted any NCD’s money will be debited from your Saving Bank a/c.
• Kindly check your DP for credit of allotted NCD’s.
• After listing of any NCD you can Sell/Buy from the secondary market if you wish to or else hold it back till maturity.