— Kishore V, SME and ACW at Edumarz
It describes the situation in which the debentures are repaid from the capital rather than the earnings.
As a result of this requirement, no profit is transferred to the Debenture Redemption Reserve, which must be established since debentures cannot be redeemed totally from the capital.
By establishing a Debenture Redemption Reserve, SEBI has provided criteria for the redemption of debentures.
There are, however, several businesses that are excluded from establishing a reserve, including:
1. Debenture issuers with an 18-month maturity period.
2. infrastructure-related businesses such as maintenance, construction, and business growth.