Question -
Answer -
It refers to the repayment of debentures by the company to the debenture holders. In this process debenture holders get payment for the debentures they were issued and the repayment is made as per terms and conditions determined at the time of debenture issue. It may be redeemable at par, discount or premium. Redemption takes place from profits or from a fresh batch of debentures. Following methods are used in redeeming debentures:
1. By conversion into equity shares and new debentures
2. By annual drawing in instalments
3. By purchasing debentures in an open market
4. Lump sum payment on maturity date
5. Utilizing call or put option