In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowledges it, but in some countries the term is now used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the company's liability to pay a specified amount with interest. Although the ... Learn what a debenture is, its features, types, advantages, and disadvantages. Understand debentures' meaning , merits, and how they differ from participating debentures . What is a Debenture? A debenture is a type of long-term debt instrument that a company issues to borrow money from investors. In return, the company promises to pay a fixed rate of interest at regular intervals and return the principal amount on maturity. In simpler words, when you buy a debenture, you’re lending money to the company — and in exchange, you earn interest (also known as a coupon). Debentures are similar to bonds but are typically issued by corporates rather than governments. Debentures are debt instruments that companies and governments use to raise capital from investors. They offer fixed interest payments, no voting rights, and various types based on security, convertibility, term, and registration.
