Why NCD beats Company Fixed deposit

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Why NCD beats CompanyFixed deposit
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• What is NCD?
• NCDs (Non-Convertible Debentures) refer to
  debentures which can't be converted into shares
  or equities.
• A brief Introduction
• An NCD might not ring a bell in the minds of
  most Indian investors but is quite popular in the
  western world. The concept of issuing NCDs is
  relatively new to India, having been first issued
  by SBI in 2008-09 to retail investors. The bonds
  are listed on BSE/NSE retail debt terminal.

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Advantages of investing in NCDs v/s
Bank/Corporate Deposits
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• NCDs are in demat form- eliminates hassle of
  maintenance and safety of physical certificates.
• NCDs can be traded- The bonds issued under
  public offer are listed on the BSE/NSE. Absence
  of lock in period ensures the investor can exit
  before maturity.

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• No TDS Deduction- Since the bonds are in demat
  form and are listed there is no TDS.
• Opportunity to earn profit- The bonds are listed
  and traded on the market, which gives an
  opportunity to trade and earn profits. The value
  of these bonds is inversely proportional to the
  interest rates in the economy.

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• Secure- Unlike Bank deposits which can generally
  be insured upto a certain limit, around Rs.1 lakh
  in most cases, NCDs are secure in nature.
• Pledging of NCDs- Bonds can be pledged with
  banks/NBFCs to avail a loan or overdraft
  facility.

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• Flexibility in tenure of maturity- The tenure of
  NCDs could range from less than a year to 30
  years. This acts as a buffer against reinvestment
  risk and also offers a steady source of income
  through interest.
• Earn interest income till date of transaction- If
  an investor sells the bonds before their maturity
  he/she will get the accrued interest till the
  date of the sale.

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• Multiple interest payment options- An investor
  has the option to choose either cumulative
  payment or regular payment on interest.
• No settlement risk- The transactions are
  confirmed off-market but are settled on the
  NSE/BSE platform, thus eliminating settlement
  risk.

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