BharatNotes Debenture
nounUsage in a UPSC answer
To finance its ambitious infrastructure pipeline without diluting equity or straining the fiscal deficit, the public-sector undertaking floated non-convertible debentures, betting that institutional investors would prize the assured coupon over the volatility of the broader bond market.
Synonyms
Antonyms
Word Family
debentures (n pl), debenture-holder (n), debenture-stock (n)
Root
Latin dēbentur = there are owing (3rd pers. pl. passive of dēbēre = to owe); dē- = from + habēre = to have
Etymology
From Latin dēbentur ("there are owing"), the third-person plural passive of dēbēre ("to owe"); used in English since the mid-15th century, originally as the opening word of such debt certificates.
Memory Hook
Hidden inside DEBENTURE is DEBT — and its Latin root debentur literally means "they are due," i.e. a debt that must be repaid.
How This Word Works in UPSC Writing
A long-term debt instrument acknowledging money owed by the issuer. The distinction that decides most questions is between a debenture-holder and a shareholder: the holder is a creditor with a contractual claim to a fixed coupon and priority in liquidation but no voting rights, while the shareholder is an owner with a residual claim and a say in governance. One India-specific point is worth noting, since debenture here covers corporate debt whether secured or unsecured, unlike the older British usage where the word implied an unsecured instrument. Public issues of debt securities are regulated by SEBI, and a debenture trustee is appointed to act for holders, who are dispersed and individually powerless against the issuer.
Don’t Confuse It With
A debenture is debt carrying a fixed return and creditor status. A share is ownership carrying a residual return and voting rights. A bond is the broader category, more often used for government or secured issues. A convertible debenture begins as debt and converts into equity on stated terms, while a non-convertible debenture stays debt throughout. The coupon is the contracted interest rate on face value, whereas the yield is the return relative to the price actually paid in the market.
Hindi Meaning
ऋणपत्र (rinpatra); परिवर्तनीय ऋणपत्र for a convertible debenture.
Common Questions
- How is a debenture different from a share?
- A debenture makes the holder a creditor with a fixed return and priority in liquidation but no vote, while a share makes the holder an owner with a residual claim and voting rights.
- What is a non-convertible debenture?
- A debenture that cannot be converted into equity shares and remains a debt instrument until it is redeemed.
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