NCD Full Form in Share Market

What is the Full Form of NCD in the share market?

The NCD’s full form in the share market is Non-Convertible Debentures. These are the financial instruments that are used to raise long-term funds by companies through public issues. It is not possible to convert NCD into shares or equities, unlike convertible debentures. NCDs have a fixed date of maturity, and their interest can be paid along with the principle amount monthly, quarterly, or annually based on the specified fixed tenure.

Types of Non-Convertible Debentures:

There are two major types of non-convertible debentures. Secured NCDs are those that are backed by the issuer company’s assets, and unsecured NCDs are not backed by assets and are based only on the creditworthiness of the issuer. NCDs are listed on the stock exchange after the issuing company begins its public issue for a specific period. People can invest in NCDs through the stock exchange.

Features of Non-Convertible Debentures

NCDs have a fixed interest rate, and the interest rate is higher than convertible debentures. NCDs are available to investors through open market public issues that companies in defined periods conduct. Non-convertible debentures are traded actively in the stock market. This offers the flexibility for the investors to buy or sell NCDs in the secondary market, and to manage their portfolios effectively. As NCDs lack collateral banking, only companies with good credit ratings can issue them.