Bonds are the primary Source of Raising Finance for various stake holders for their Long term and medium-term needs.
Bonds carry a specific Maturity Period or can be perpetual and carry a specific rate of interest payable.
Bonds can be issued by Government both State and Central Government, Public Sector undertaking companies, Private Limited Companies.
Bonds can be secured or unsecured, Guaranteed or non-Guaranteed. Every bond is subject to a rating based on various parameters of financial health, past repayment history, hygiene of business and future growth or potential for growth.
Based on rating assigned to a Bond the interest rate would vary. Rating is a benchmark to understand the risk of investing in any of the Bonds issued in India
Difference between a bond and a debenture: A bond is backed by the security provided by the issuer however a debenture is unsecured and issued more on faith and ability of the company to repay the money on maturity.