Question

As a result of the measures taken by the government in the year 2019-20 of non-creation of Debenture Redemption Reserve by listed companies/NBFCs or HFCs, the investments in the debenture issues from these companies have become riskier.

State the adverse impact of this measure on the investors?

Answer 1

A specific portion of the divisible profits is transferred to DRR in the event that DRR is created.We refer to this as redemption out of profits. Such a sum is not accessible for dividend payments. The risk connected with debentures is increased when DRR is not created because redemption is out of capital.