Non-Convertible Debentures (NCDs)!

Before investing in Non-Convertible Debentures (NCDs), apply the following parameters: Understand the product - Like who is the issuer and what is their business. Are they lending to high-risk borrowers or not? Is the company an NBFC or is it a bank bond. Assess the risk – Company may default or delay payments if it is rated A or below. Secured NCDs does not guarantee return of capital. If there is subordinate debt, then banks & other financial institutions will have priority in liquidation process. Check Liquidity – The NCDs might be listed but volumes on the exchange could be low which might make it difficult to sell. Returns post tax - If returns after deducting tax are not more than Bank FD then it is not worth investing.