Question

What is meant by redemption of debentures?

Hint:

Redemption \(\neq\) interest payment; interest is periodic, redemption settles principal.

Answer 1

Step 1: Essence.
Debentures are borrowings; redemption is the discharge of this liability.
Step 2: Modes.
(i) Lumpsum at maturity, (ii) by annual instalments/draw of lots, (iii) by \emph{purchase in the open market}, or (iv) by \emph{conversion} into shares/new debentures.
Step 3: Possible premium/discount.
Redemption may be at par or at premium as per the terms.
Final Answer: \[ \boxed{\text{Repayment/discharge of debenture liability as per agreed terms}} \] % Quciktip