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Why do company issue debentures, when they can borrow money from Bank.

Debentures are loan which company borrow's  from general public .Although Companies can borrow money from Bank many companies go to bank as a last resort of funding. When bank lend money they generally place restriction on how that money can be used. ex- borrowed fund can be used only for capital expenditure or they limit companies ability to raise additional funds till this loan is repaid. etc.

Thus most companies in order to avoid this go for loan from general public i.e Debenture.


General public on the other hand get good return 11-13% . Compared to Government deposit schemes (NSC 8.5% ) or Bank Deposit (8%-9.5%) . Surely this extra returns of 2-4% comes with risk. 


Why debentures not shares from meraskill
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