Debenture Redemption Reserve

A provision that was added to the Indian Companies Act of 1956 during an amendment in the year 2000. The provision states that any Indian company that issues debentures must create a debenture redemption service to protect investors against the possibility of default by the company.

Investopedia Says:
Under the provision, debenture redemption reserves will be funded by company profits every year until debentures are to be redeemed. If a company does not create a reserve within 12 months of issuing the debentures, they will be required to pay 2% interest in penalty to the debenture holders. Only debentures that were issued after the amendment in 2000 are subject to the debenture redemption service.

Related Links:
Don't be fooled by the name - junk bonds may be for you if you know how to analyze them. Junk Bonds: Everything You Need to Know
Investing in bonds - What are they, and do they belong in your portfolio? Bond Basics Tutorial
Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy. Corporate Bonds: An Introduction To Credit Risk