What is a Debenture? Meaning, Types, Features & Benefits | JM Financial ... What Is a Debenture?
A debenture is a type of bond or other debt instrument that is unsecured by collateral and relies entirely on the creditworthiness and reputation of the issuer for support. The legal term "debenture" originally referred to a document that either creates a debt or acknowledges it, but in some countries the term is now used interchangeably with bond, loan stock or note. A debenture is a debt instrument backed only by the issuer’s creditworthiness, not by any specific collateral. Corporations and governments issue debentures to raise capital without pledging property or diluting equity ownership.
debenture meaning, A debenture is a loan certificate issued by the company to its holders. Instead of borrowing entire funds from an individual, a company can divide the funds into certain small denominations or parts (i.e., debentures). A debenture is a legal document that states the amount invested or lent, interest due, and the repayment plan. At the conclusion of the term, the investor receives the principal and interest. Let’s break it down in simple terms.
debenture meaning, What is a Debenture? A debenture is a type of long-term debt instrument that a company issues to borrow money from investors. In return, the company promises to pay a fixed rate of interest at regular intervals and return the principal amount on maturity. A debenture is a legal document securing a loan against a company’s assets, giving lenders protection and priority if the company defaults or becomes insolvent.
