Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

Differences between NCDs and Bonds


For corporate firms, borrowing is a standard route for accessing funds. Bonds and Non-Convertible Debentures are two different borrowing routes to raise funds. Bonds are usually issued by the government and large corporations, while large public companies issue debentures to raise money from the market.

Understand the difference between NCD and Bonds

Investment type

A bond is a secured investment as collateral. An asset gets pledged here. So, if the issuer fails to repay the amount, the Bond owners can sell the asset and get their funds back. On the other hand, NCDs are usually unsecured. Any assets do not back them, so choosing a credible organisation when investing in debentures is essential.

Interest rate

The interest rates on bonds are lower than debentures. The low interest shows the low-risk factor while there are high interests in Non-Convertible Debentures, but it is risky. The interest on the Bond gets distributed monthly, half-yearly, or annually, and the interest amount is fixed or floating. The payment has no relation to the market performance of the issuer. But if you buy debentures, the interest rate may be high, and it gets paid depending on the issuer's performance.

Additional Read:Comparing NCDs/Bonds and Debt Mutual Funds

Possibility of conversion

When you own Bonds, there are chances of converting them to stocks if you have Convertible Bonds. But with Non-Convertible Debentures, it is impossible to convert them into the stock of the company.


Bonds are generally long-term investments compared to NCDs. But the tenure varies based on the issuing company.


Bonds are secured by an asset and are less risky compared to Debentures. Since Debentures are not backed by collateral, the risk is high.

Issuing body

Debentures are issued by private companies, while the government and financial organisations usually offer bonds.Bonds and Debentures are both borrowing forms, but the difference lies in the instruments. A Bond is highly secure and is ideal for those who want a regular income source through interest.If you have the skills to gauge the creditworthiness of the Debenture issuer, you can buy them for better profit. However, if you are new to the investment sector, then Bonds are better than Debentures. They are secure as the government issues them, and the returns are guaranteed.

Additional Read:How Interest Rates affect Bond Prices

If you have a higher risk appetite and want to generate a better profit in the long term, you may want to consider Debentures. Compare both and keep your risk profile and investment goals in mind before making the decision.


Bonds – 6 times

NCDs – 2 times

Non- Convertible Debentures – 2 times

Difference between NCD and Bond – 1 time 


ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  I-Sec is acting as a distributor to solicit bond and NCD related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.