Non-convertible debentures (NCDs) are a good investment option for certain investors, as they have benefits, as well as risks involved. Here's why NCDs can be a good investment.
- Higher returns: NCDs typically offer higher interest rates than traditional investments such as fixed deposits or government bonds, making them attractive to investors looking for higher returns.
- Security and protection: NCDs are generally secured, which gives investors a higher chance of getting their money back, especially as NCD holders are given priority over equity holders.
- Liquidity: Listed NCDs can be traded on the stock exchange through a Demat account, which provides liquidity and allows investors to buy or sell as required. This is a significant advantage for investors looking for flexibility.
- Tax benefits: NCDs are not subject to tax deducted at source (TDS), so investors receive the interest income directly. However, the interest income is taxable according to the investor’s tax bracket.
- Regulation and credibility: NCDs are usually regulated by the SEBI and the companies are rated by rating agencies, which boosts investor confidence in the company's financial stability.
