There are many fixed interest yielding instruments and two of these include fixed deposits and non convertible debentures. Both these securities tend to give you interest at regular intervals. However, there is a difference between Non Convertible Debentures (NCDs) and fixed deposits.
Debentures can be converted to shares and these are called convertible debentures. In India these are no longer in vogue and we do not see companies converting debentures to shares as was a practice in the past. Non convertible debentures cannot be converted into shares.
In the past there have been many companies that have come out with listed NCDs, where you can buy and sell the same through the stock exchanges. What this means is that another individual can buy an NCD.
In the case of a fixed deposit, the same cannot be bought by another individual. It has to be surrendered to the company, which pays back the maturity amount along with accumulated interest.
Both a non convertible debenture and a fixed deposit have a definite maturity period. This is unlike shares where they are perpetual and do not have any maturity period.
Muthoot Fin Corp, ECL Finance, SREI Infrastructure Finance, Shriram City Union are the popular non convertible debentures that are currently traded on the Indian stock exchanges. Fixed deposits it maybe noted can be of various kinds and this would include company fixed deposits, as well as bank fixed deposits. The latter are considered more safe and secure.
In any case, the one simple feature that remains vital to both is that you receive interest on both the instruments. This maybe cumulative or frequent payment of interest. A fixed deposit is never listed, while a non convertible debenture is.