What is an NCD?

How are NCDs issued in India?

A non-convertible debenture is a company’s promise to pay you a fixed return and return your principal: debt, not ownership, with no path to becoming equity. That last word, non-convertible, is what separates it from instruments that flip into shares later; an NCD stays a bond for its whole life.

Companies raise NCD money two ways, both governed by SEBI’s Issue and Listing of Non-Convertible Securities Regulations, 2021. A public issue is marketed to retail and institutional investors with a prospectus, much like an IPO for bonds. A private placement sells to a small set of qualified investors, and once a single issue reaches ₹20 crore or more — including any green-shoe option — it must go through an exchange Electronic Book Provider (EBP) platform, where price discovery happens on a regulated venue rather than over the phone. SEBI cut that threshold from ₹50 crore in its May 2025 EBP review.

One requirement applies whichever route is used: a credit rating from a SEBI-registered rating agency, disclosed up front. The rating is the single most important number an NCD investor reads, because it is the market’s standing estimate of whether the promise will be kept.

Secured vs unsecured NCDs

The label every NCD buyer should check is secured or unsecured, because it decides what happens when things go wrong. A secured NCD is backed by a charge over specific company assets — property, receivables, a fixed-asset pool — that a debenture trustee can enforce on the holders’ behalf. The issue documents state the security and a stated security cover ratio, and periodic filings report whether that cover is being maintained.

An unsecured NCD has no such charge. Holders rank alongside the company’s other unsecured creditors, behind anyone holding security, which is why unsecured paper from the same issuer typically carries a higher coupon. Same company, different queue in a default, and the coupon is the price of standing further back.

The filings a listed NCD generates

Once an NCD is listed, it becomes a steady source of corporate announcements on the NSE and BSE debt segment, governed by ongoing obligations under the LODR Regulations. Expect interest-payment intimations ahead of each coupon date, record dates fixing who receives that interest, redemption notices as the bond matures, and periodic financial results and security-cover statements. None of this is dramatic in normal times. It is the routine heartbeat of a performing bond.

The point of knowing the heartbeat is hearing when it skips. A delayed interest intimation, a missed record date, or a sudden security-cover shortfall reads very differently against that baseline than it would in isolation.

What a rating change tells you

A rating action is the loudest signal an NCD sends, and it carries information well beyond the bond itself. A downgrade raises the company’s cost of borrowing, can trigger covenants in other loans, and frequently lands before the equity market has fully priced the trouble, which makes rating revisions among the most predictive filings in any distress sequence. Our methodology weights a rating action well above the coupon-date housekeeping that surrounds it.

Upgrades work the same way in reverse, if more quietly: a rising rating signals improving credit and cheaper future funding. Either direction, the rating agency is doing a continuous credit assessment in public, and the filing is free to read the moment it posts.

When NCDs go wrong

Default flips the relationship. The debenture trustee — appointed at issuance to represent holders collectively — steps from a monitoring role into an enforcing one: convening holder meetings, invoking security where the NCD is secured, and, if recovery demands it, dragging the issuer into insolvency. At that point the bond holders become financial creditors in a process run by the NCLT, where a resolution plan or liquidation decides what they recover. Whether a single missed payment is a clerical slip or the first domino is the kind of distinction that rewards reading the debt segment as closely as the equity one, which is why our debt and bonds digests follow interest intimations, rating actions, and trustee notices for the companies you track, not just their share-price headlines.