Real Estate NCD:

A Real Estate Non-Convertible Debenture (NCD) is a type of fixed-income financial instrument issued by real estate companies to raise capital. NCDs are essentially debt instruments that cannot be converted into equity shares and are used by companies to borrow money from investors at a fixed interest rate for a specific period.

Here are key points about Real Estate NCDs:

1. Issuer: Real estate developers issue NCDs to fund various projects like residential and commercial developments. It helps them raise substantial amounts of capital without diluting ownership.

2. Interest Payments: NCDs offer a fixed interest rate, typically higher than traditional bonds or bank fixed deposits, making them attractive to investors looking for steady returns.

3. Tenure and Maturity: NCDs usually come with a fixed tenure ranging from a few years to a decade, after which the principal is repaid along with the final interest payment.

4. Secured vs. Unsecured NCDs: Some NCDs are secured, meaning they are backed by the issuer's assets (like property or land), offering greater security to investors. Unsecured NCDs do not have this backing and thus come with higher risk but also higher interest rates.

5. Taxation: Interest earned on NCDs is taxable as per the investor’s income tax slab. However, NCDs listed on a stock exchange can benefit from capital gains tax advantages if sold before maturity.

6. Liquidity: Listed NCDs can be traded on stock exchanges, giving investors the opportunity to sell before maturity if needed, though the liquidity can vary based on market demand.

Investing in real estate NCDs provides exposure to the real estate sector while potentially offering higher returns compared to other fixed-income instruments, albeit with higher risks, especially in the case of unsecured NCDs.

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