Question

What do you mean by Redemption of debentures?

Hint:

Think of "Redemption" as "Repayment". Just as a loan is paid back, a debenture is redeemed.

Answer 1

Step 1: Understanding the Concept:
Debentures represent long-term debt taken by a company. Like any loan, it has a maturity date upon which the principal amount must be returned to the lenders (debenture holders).

Step 2: Detailed Explanation:
The term 'Redemption' in financial contexts simply means discharging a liability. Therefore, Redemption of Debentures means the repayment of the principal amount of the debentures to the debenture holders. This repayment is done according to the terms and conditions agreed upon at the time of their issue (e.g., at par, at premium, in lump sum, or in installments).

Step 3: Final Answer:
Redemption of debentures refers to the discharge of liability on account of debentures by repaying the due amount to the debenture holders.