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A convertible debenture is a kind of long-term debt which can be transformed into stock after a specific period of time.They are long-term debt securities that pay interest returns to the bondholder. A unique feature of convertible debentures is that they can be converted into stock at specified times.

When a debenture is secured, it's backed up by collateral. In other words, the lender receives a kind of insurance against the the loan not being paid back. If the borrower defaults and can't pay off their loan, the lender can redeem what is owed by acquiring the assets belonging to the borrower.

Definition. Convertible debentures are those type of debentures that can be converted into equity shares of the company. Non-convertible debentures are those debentures that cannot be converted into equity shares of the company. Rate of Interest.

What is a Debenture? A debenture is a bond issued with no collateral. Instead, investors rely upon the general creditworthiness and reputation of the issuing entity to obtain a return of their investment plus interest income.Examples of debentures are Treasury bonds and Treasury bills.

Features of Debentures:Debenture holders are the creditors of the company carrying a fixed rate of interest.Debenture is redeemed after a fixed period of time.Debentures may be either secured or unsecured.Interest payable on a debenture is a charge against profit and hence it is a tax deductible expenditure.More items...

A debenture is a debt instrument which is not backed by any specific security; instead the credit of the company issuing the same is the underlying security.Bonds, however, in India are typically issued by financial institutions, government undertakings and large companies.

We calculate Interest on debentures at a fixed rate on its nominal (face) value payable quarterly, half yearly or yearly as per the terms of issue. The rate of interest is a prefix value to the debenture, say 9% Debentures and, therefore, is payable even if the company incurs a loss. It is a charge against profit.