It stands for non-convertible debenture; a debenture that is not changeable/ convertible to equity shares or in any other type of security of the issuer. Non-convertible debentures are fixed-income instruments for certain terms and interest rates. Large companies issue such instruments to raise long-term funds (long-term capital in the form of debt capital) without giving the holders (investors, lenders) any option of conversion to equity.

Non-convertible debentures (NCDs) cannot be converted into shares, but are solely issued as a means by which an investor can generate a fixed stream income. Each Non convertible debenture has a predetermined rate of interest and a fixed maturity date. The interest on NCDs can either be paid with the principal (face value) on the maturity date or at specific time intervals (monthly, quarterly, or yearly).

NCDs may take the form of secured NCDs and unsecured NCDs. Secured NCDs are backed by a collateral, which makes repayment more certain than unsecured NCDs. In case principal or interest are not paid on maturity, an investor can sell the collateral and recover the debenture’s principal amount or interest payments. Since the interest and principal are guaranteed to a certain level, secured NCDs carry a lower rate of interest as the risk involved is less than that associated with unsecured NCDs.

NCD may denote for negotiable certificate of deposit.