What is Debenture redemption reserve?

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Debenture redemption reserve is a reserve created by the company to minimize the risk of default in payment of debenture amounts.

Debenture redemption reserve commonly known as DRR is created out of company profits that are earmarked to pay dividends. Earlier it was mandatory for all companies issuing NCD to maintain DRR failing which they were liable to pay penalty. However, in August 2019, the Ministry of Corporate Affairs (MCA) introduced certain relaxations in reference to maintenance of DRR.

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