A debenture that has a fixed maturity date by which it can be redeemed by the issuer. It continues until redemption date as the issuer is committed to repurchasing it from its holders. The holders receive periodic interest payments (as a time-bound income stream) as long as the principal remains invested. Repayment of the principal is subject to a specific redemption date.

This type of debenture has a provision/ clause whereby the issuer is bound to repay the borrowed amount by a predetermined date to the original lender or debenture holder. Thanks to this provision, issuers can attract more investors given the stipulated obligation to repurchase the debenture and repay its principal as and when it falls due.