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A debenture is a form of unsecured debt (in American usage). The debenture is the most common variety of bonds issued by corporations and government entities. Strictly speaking, a U.S. Treasury bond and a U.S. Treasury bill are both debentures.

A debenture is an instrument used by a lender, such as a bank, when providing capital to companies and individuals. It enables the lender to secure loan repayments against the borrower's assets ? even if they default on the payment. A debenture can grant a fixed charge or a floating charge.

A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, they must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds.

Bonds are debt financial instruments issued by financial institutions, big corporations, and government agencies having the backing of collaterals and physical assets. Debentures are debt financial instruments issued by private companies but are not backed by any collaterals or physical assets.

A debenture is a form of security that a Company grants to a lender in exchange for funding. The funding can be in any form, and most commonly it relates to a long-term funding facility, such as a loan granted to a company that is repayable over a period of time.

Two types of debentures are issued by the companies: Convertible Debentures and Non-Convertible Debentures.

Debentures are a debt instrument used by companies and government to issue the loan. The loan is issued to corporates based on their reputation at a fixed rate of interest.Secured and Unsecured, Registered and Bearer, Convertible and Non-Convertible, First and Second are four types of Debentures.

In the event of winding up, debentures get priority of repayment over shares. Shares cannot be converted as opposed to debentures are convertible. There is no security charge created for payment of shares. Conversely, security charge is created for the payment of debentures.

Advantage of DebenturesDebentures do not give right either to vote or take part in the management of the company.The Debenture is tax deductible expenditure which can save income tax.Cost of debenture is relatively lower than preference shares and equity shares.Debentures are advantageous during times of inflation.More items...

The following are the advantages of debentures:Secured investments. Debentures provide greatest security to the investors.Fixed return. Debentures guarantee a fixed rate of interest.Stable prices.Non-interference in management.Economical.Availability of funds.Regular source of income.