By VestAI Research | Last updated: March 2026
NCD: Meaning, Definition & Indian Stock Market Examples
Non-Convertible Debenture — fixed-income bond that cannot be converted to equity.
What is NCD?
A Non-Convertible Debenture (NCD) is a fixed-income debt instrument issued by companies to raise capital. Unlike convertible debentures, NCDs cannot be converted into equity shares. They pay fixed interest (coupon) and return the principal on maturity. NCDs can be listed on exchanges and traded like bonds.
NCD — Indian Stock Market Example
Bajaj Finance, Shriram Finance, and Muthoot Finance regularly issue NCDs to retail investors at 8–10% annual returns. NCDs are rated by agencies like CRISIL (AAA is safest, D is default). DHFL's NCD default in 2019 caused significant losses to retail investors who had invested for higher yields.
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Analyse with OrionFrequently Asked Questions about NCD
Are NCDs safer than equity investments?
NCDs have fixed returns and higher priority over equity in case of liquidation, making them less risky than stocks. However, they carry credit risk — if the company defaults, investors may lose principal. Always check the credit rating: AAA/AA+ rated NCDs from reputable issuers are relatively safe; lower-rated NCDs carry meaningful default risk.
How is NCD interest taxed?
NCD interest is added to your income and taxed at your slab rate. TDS of 10% is deducted on listed NCD interest payments if total exceeds ₹5,000. Capital gains on selling NCDs before maturity: STCG (< 12 months) at slab rate; LTCG (> 12 months) at 10% without indexation or 20% with indexation.
Related Terms
Debenture
Unsecured long-term debt instrument issued by a company — backed only by creditworthiness.
InvIT
Infrastructure Investment Trust — listed fund owning revenue-generating infrastructure assets.
Interest Coverage Ratio
EBIT divided by interest expense — shows ability to service debt.
Debt-to-Equity Ratio
Total debt divided by shareholder equity — measures financial leverage.
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