How NCD works?

NCDs or non-convertible debentures are issued to raise money from investors. The issuers raise the money in the form of a loan. The issuer pays interest to the investors. The frequency and type of interest is determined in advance. It can be monthly, annual, quarterly or cumulative. At maturity, the entire amount is repaid to the investors. The procedure is as follows:

• The issuer announces the NCD offer in advance. The investors can check for the information such as:
  • Issue price,
  • Face value,
  • Coupon rate,
  • Payment Frequency,
  • Tenor,
  • Rating details and other important information.
• Interested investors can buy the NCDs once the offer period is open. They must purchase before the offer closes.
• All investors can check the allotment status on the registrar's website.
• Allotted investors will receive the bonds as a credit to their demat account.
• The NCDs get listed on the stock exchange on the listing date.
• Issuers start making interest payments as per the NCD offer document.
• Investors receive the principal and interest (as applicable) on the maturity date.