Debenture
A debt instrument issued by a company, which in India may be secured against assets or unsecured.
How it is identified
Test: the instrument acknowledges a debt of the company and is issued under a debenture trust deed
Unit
qualitative
In depth
Indian usage differs from American: in India a debenture may be secured by a charge on company assets, while in the United States the word means specifically an unsecured obligation. That difference matters when reading international material. Debentures are issued under a trust deed with a debenture trustee appointed to act for holders, which is the mechanism through which holders enforce their rights collectively. Whether a debenture is secured, and against what, is stated in the offer document and determines recovery in a default — an unsecured debenture ranks with other unsecured creditors and behind secured lenders.
Worked example
A secured debenture with a first charge on land recovers ahead of unsecured creditors in liquidation. An unsecured one from the same issuer, at the same coupon, recovers only after every secured claim is settled in full.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Debenture” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.