DEB Banking Abbreviation

Debenture

A debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. They are commonly issued by governments and corporations to raise capital. Investors in debentures are essentially lending money to the issuer, in return for which they receive interest payments at fixed intervals and the return of the principal amount on a specified maturity date.

Debentures play a crucial role in the financial markets, offering a way for entities to secure long-term funding without diluting ownership. For investors, they provide a relatively safe investment option, especially when issued by stable governments or blue-chip companies. However, the risk level can vary significantly depending on the issuer's financial health, making it essential for investors to conduct thorough due diligence before investing in debentures.