Word of the Day NCDs It is the money that a company borrows from investors with a fixed interest rate It stands for Non-Convertible Debentures. It is a debt instrument — meaning the company does not give any shares for the money invested. It is called ‘non-convertible’ because the loan can’t be converted into shares of the company. The other kind is called 'convertible debentures' — this investment can be converted into shares. Example: a company ABC wants to raise Rs 100 crore to expand its business. Instead of issuing shares to the investors (which would dilute ownership), it issues NCDs at a 9% interest rate for 5 years. There are 2 types of NCDs: -Secured NCDs: the company backs these loans with some assets as collateral for the money invested — less risky. -Unsecured NCDs: not backed by collateral for the invested money — considered riskier than the secured NCDs.