#bonds and debentures

[stashfininfo]

Bonds vs Debentures: Key Differences Explained Discover the key differences between bonds vs debentures in terms of risk, returns, and structure. Learn which investment suits your financial goals.

[priyashareindia9]

The term debenture comes from the Latin word ‘debentur’, which means borrow. Debentures are one of the types of bonds that government entities or corporations use to raise capital. They are one of the most popular debt instruments, along with bonds. 

[finwisor]

Beginner investors are advised to start with bonds and gradually explore debenture opportunities. When investing in either loan instrument, it is crucial to take important elements into account such as interest rates, payback terms, and other pertinent possibilities.

[pallavirajput74]

Pros and Cons of Market-Linked Debentures

When it comes to growing your money, the world of finance offers a variety of avenues to explore. One such option that’s been making waves in India is Market Linked Debentures, also known as MLD bonds.

[allthebrazilianpolitics]

Credit fundraising slows down in Brazil

Trend driven by closure of contributions, particularly in more liquid portfolios

After seven consecutive months of record-breaking net funding, corporate debt funds saw their first slowdown of the year. A report from Banco ABC Brasil’s research department shows that in September, the volume of fundraising dropped from the previous range of R$40 billion to R$50 billion per month to just R$17 billion. According to fund managers, the deceleration is primarily due to large funds—especially those with high liquidity, allowing same-day or next-day redemptions—that had been attracting most of the investments in the category since the beginning of the year. These funds are now closing to new contributions, as surging demand has driven risk premiums on bonds down significantly, making it harder to allocate resources effectively.

A survey conducted by Valor on the Brazilian Securities and Exchange Commission (CVM) website revealed that between September 5 and October 14, Santander closed five funds to new funding, three of which were corporate debt funds, with the remaining two focused on infrastructure. The two incentivized debenture funds reopened briefly but soon closed again. During the same period, Itaú Asset closed about 15 fixed-income funds, three of which were dedicated exclusively to corporate debt, while reopening three others, two of which were corporate debt funds. Caixa closed a corporate debt fund, and BTG Pactual shut down an infrastructure fund. Among independent players, SulAmérica also closed a corporate debt fund.

In the case of infrastructure funds, halting new contributions had already become a common practice since May, when risk premiums plummeted, and the supply of new issues failed to meet demand. Sparta, for instance, was one of the first to adopt this strategy, and many of its products have remained closed in recent months. However, closures within corporate debt were sporadic and minimal until September and October, when they became more widespread.

Continue reading.

[samarthcapital]

How Can NRIs Invest in India With NRI Services?

Non-resident Indians (NRIs) hold a unique position in the Indian economy. They are not only a valuable source of foreign exchange, but also a potential force driving the country's growth story. Navigating investments in India can be a bit confusing for NRIs. Understanding where and how to invest amidst regulations, tax implications, and diverse options can feel tricky, which is why, NRIs willing to invest in India can rely on NRI services, which make investing easier as per the rules set by RBI and SEBI under the Foreign Exchange Management Act (FEMA).

Where Can NRIs Invest in India?

NRI services encompass a range of financial solutions tailored specifically for non-resident Indians seeking to invest, manage their wealth, and connect with their homeland. It is vital to understand where NRIs can invest in India.

Equities

NRIs can invest directly in Indian stocks through the Portfolio Investment Scheme (PIS) by the Reserve Bank of India (RBI).

Mutual Funds

Investing in Mutual Funds offers various choices like Equity, Balanced, Bond, and Liquid Funds. Unlike direct equities, NRIs investing in Mutual Funds do not require PIS permissions from RBI. However, some restrictions may apply to NRIs from the US and Canada due to reporting regulations.

Government Securities

NRIs can invest in government securities on NRE and NRO basis, each with different tax implications based on the type of investment.

Fixed Deposits

Investment opportunities in fixed deposits are available for NRIs through Banks or Non-Banking Financial Companies (NBFCs), each with its tax implications based on the NRE (Non-Resident External) or NRO (Non-Resident Ordinary) basis. NRIs can also invest in Foreign Currency Non-Resident (FCNR) fixed deposits.

Real Estate

NRIs can invest in real estate except for certain property types like agricultural land, farmland, or plantations.

National Pension Scheme (NPS)

NPS, a retirement savings plan, offers tax benefits. Contributions can be made from NRE or NRO accounts, but the pension must be received in India.

Portfolio Investment Scheme (PIS)

PIS allows NRIs to trade in shares and debentures through a designated bank account. It helps regulate NRI holdings in Indian companies, preventing breaches of set limits.

How Experts Simplify NRI Services?

Experts like Samarth Capital simplify the investment process by providing guidance, ensuring NRIs make informed decisions aligned with their goals. Here’s how they make investing easy for NRIs.

Helping open NRE / NRO savings and PIS bank accounts.

Setting up brokerage and demat accounts for trade.

Monitoring your portfolio regularly.

Engaging tax consultants for compliance.

Understanding Taxes and Rules

For NRIs, it's crucial to understand tax implications in India and their country of residence. Compliance with the Double Tax Avoidance Agreement (DTAA) and filing taxes in India if taxable income exceeds the exemption limit is important.

Wrapping Up

Investing in India as an NRI offers diverse opportunities. With guidance and a grasp of regulations, NRIs can navigate this landscape effectively and make the most of available avenues. Samarth Capital, not only facilitates NRI investments but also helps foreigners invest in India with FPI services. So, whether you're an NRI or a foreigner, investment in India isn't a far-fetched dream anymore.

[ebelal56-blog]

How To Avoid Financial Disasters (Strategically)

📊 What Are Financial Instruments? | Types, Examples & Their Importance 💼 Financial instruments are essential tools in global markets, facilitating the flow of capital, risk management, and investment strategies. In this video, we explain what financial instruments are, the different types, and how they function in today's financial ecosystem. 🔍 In This Video, You’ll Learn: ✅ What are financial instruments? ✅ Equity Instruments – Common Stock, Preferred Stock ✅ Debt Instruments – Bonds, Debentures, Notes ✅ Derivative Instruments – Options, Futures, Swaps ✅ Money Market Instruments – Treasury Bills, CDs, Commercial Paper ✅ Foreign Exchange Instruments – Forex Trading Tools ✅ Commodity Instruments – ETFs, Commodity Derivatives ✅ Hybrid Instruments – Convertible Bonds, Preferred Hybrids ✅ How investors and institutions use these tools ✅ Key factors: Risk, Return, Liquidity, Regulation 🎯 Whether you're a finance beginner, preparing for CFA, CA, MBA, or just want to expand your financial knowledge, this video simplifies complex concepts with real-world examples. 💡 Discover the difference between cash instruments and derivative instruments and understand how stocks, bonds, and other securities function in financial markets. 🔔 Subscribe for more videos on: Financial Markets Investment Strategies Economics & Finance Explained 👍 Like | 💬 Comment | 🔗 Share with friends or classmates

[exportfinancestrategiesforem]

Guatemala: A Capital Market That Benefits Everyone

Guatemala has demonstrated steady economic growth, underpinned by macroeconomic stability, a strong banking system, and manageable debt. However, to advance further and become more globally competitive, the country needs to develop a modern and dynamic capital market. Such a market would provide long-term financing options beyond traditional banking, helping fund large-scale projects in infrastructure, technology, and key productive sectors.

A Capital Markets Law is now a strategic priority for Guatemala. Its implementation would create a robust legal and regulatory framework to govern securities issuance, build investor trust, and reduce financing costs. Countries like Chile, Mexico, and Colombia offer successful models where capital markets support both large corporations and SMEs, boosting economic development and job creation.

In Guatemala, while small businesses have access to credit, large infrastructure needs remain unmet. A capital market would enable tools like bonds, investment funds, and PPPs to channel investment into roads, ports, and energy projects. For example, Mexico’s FIBRAs and Brazil’s incentivized debentures have mobilized billions for infrastructure without straining public budgets.

A well-regulated market would also democratize investment, allowing ordinary citizens to grow their savings while helping businesses access flexible financing. Institutional investors like pension funds could diversify portfolios, improving returns for beneficiaries.

Trust is crucial — transparent supervision, fraud prevention, and adherence to global best practices are essential. The success of Guatemala’s capital market requires joint effort from government, private sector, academia, and investors. By acting now, Guatemala can unlock inclusive, sustainable growth and secure its place as an attractive, investment-grade economy. Read more…https://globalbankingmarkets.com/news/guatemala-capital-market

[daassociate]

Taxation of Mutual Funds for NRIs: What Every Investor Should Know

Mutual funds remain one of the most popular investment options for both resident and non-resident Indians (NRIs), thanks to their diversified portfolios, professional management, and long-term growth potential. However, when it comes to NRIs, the taxation of mutual funds can be quite different—and understanding the nuances is essential to ensure compliance and maximize returns.

In this blog, we explain how mutual funds are taxed for NRIs, including the key types of mutual funds, applicable tax rates, TDS rules, and repatriation of funds.

📌 Can NRIs Invest in Mutual Funds in India?

Yes, NRIs can invest in taxation of mutual funds for NRI on a repatriable or non-repatriable basis using either:

NRE (Non-Resident External) Account

NRO (Non-Resident Ordinary) Account

FCNR (Foreign Currency Non-Resident) Account

Investments are typically made through NRE or NRO accounts, and the Foreign Exchange Management Act (FEMA) guidelines must be followed.

📊 Types of Mutual Funds and Their Tax Treatment

1. Equity Mutual Funds

Funds that invest at least 65% of their portfolio in equities.

Examples: Large-cap funds, ELSS (tax-saving funds), equity-oriented hybrid funds.

Taxation:

Short-Term Capital Gains (STCG): 15% if held for less than 12 months.

Long-Term Capital Gains (LTCG): 10% on gains above ₹1 lakh per financial year (without indexation), if held for more than 12 months.

2. Debt Mutual Funds

Funds that invest primarily in fixed-income securities like bonds, government securities, and corporate debentures.

Taxation: As per new rules applicable from April 1, 2023:

All capital gains are taxed as per the slab rate of the individual, regardless of the holding period.

No indexation benefit is available anymore for debt funds.

3. Hybrid Funds

Tax treatment depends on the equity exposure of the fund.

If equity exposure ≥ 65%, treated like an equity fund.

If less, taxed as a debt fund.

💰 Dividend Taxation for NRIs

From FY 2020-21 onwards, dividends from mutual funds are taxable in the hands of the investor, including NRIs.

Taxed at the applicable slab rate of the NRI.

Dividend income is also subject to TDS (Tax Deducted at Source) at the following rates:

20% for equity and debt funds, subject to DTAA (Double Taxation Avoidance Agreement) relief.

🔖 TDS Rules on Mutual Fund Redemptions for NRIs

Unlike resident investors, NRIs face TDS on capital gains from mutual fund redemptions: Type of FundSTCG RateLTCG RateEquity Funds15%10% (over ₹1 lakh)Debt FundsAs per slabAs per slabHybrid (equity ≥ 65%)15%10% (over ₹1 lakh)

Note: These are TDS rates, not final tax liabilities. NRIs can claim refunds or pay extra tax as per actual liability during ITR filing.

🌍 DTAA Benefits for NRIs

India has signed Double Taxation Avoidance Agreements (DTAAs) with over 90 countries, including the USA, UK, UAE, Canada, and Australia.

NRIs may benefit from:

Lower TDS rates on dividends or interest.

Credit or exemption for taxes paid in India in their country of residence.

To claim DTAA benefits:

Submit Form 10F, Tax Residency Certificate (TRC), and self-declaration to the mutual fund house.

🔁 Repatriation of Funds

NRIs can repatriate their investments and profits (capital and income) under certain conditions:

For repatriable investments, funds must be routed through NRE/FCNR accounts.

Mutual fund houses may require declaration of source of funds for smooth repatriation.

FEMA and RBI guidelines must be adhered to while transferring funds abroad.

📄 Required Documentation for NRI Mutual Fund Investment

To begin investing, NRIs need to complete:

KYC (Know Your Customer) process with overseas address proof and PAN.

FATCA declaration for tax compliance.

NRE/NRO bank account details.

Investment can be made online through NRI-specific platforms or through a Power of Attorney holder in India.

📈 Tax Filing Requirements for NRIs

Even if TDS is deducted, NRIs must file an income tax return in India if:

Their total income exceeds the basic exemption limit.

They wish to claim refunds or DTAA relief.

They want to carry forward capital losses.

Ensure all mutual fund gains, dividends, and repatriated funds are properly reported.

✅ Tips for NRIs to Optimize Mutual Fund Taxation

Choose Equity-Oriented Funds for Favorable Tax Treatment

Especially if planning to hold for more than one year.

Use NRE Account for Repatriation Benefits

Avoid complications during fund withdrawal.

Avoid Regular Dividend Plans

Since dividends are taxable and may incur unnecessary TDS.

Consult a Tax Expert

Especially if you're investing significant amounts or have dual tax obligations.

Keep All Documentation Ready

Including PAN, TRC, Form 10F, and KYC records.

Conclusion

Mutual funds offer a flexible and efficient way for NRIs to grow wealth in India. However, taxation is an essential aspect that must not be overlooked. With evolving tax laws, especially changes in debt fund taxation and dividend taxation, NRIs should stay informed and compliant.

Strategic investment planning, choosing the right type of fund, and leveraging DTAA benefits can help you reduce tax liability and increase your post-tax returns.

[biatconsultant]

NBFC Business Models: Loan, Investment, Leasing & More

Non-Banking Financial Companies (NBFCs) have become a crucial pillar of India’s financial system, providing financial services that often supplement the efforts of traditional banks. From loans and investments to leasing and asset financing, NBFCs cater to a wide range of customer needs—particularly in underserved markets.

In this blog, we’ll explore the major NBFC business models in India, along with insights on NBFC Registration in India, licensing procedures, and how to navigate the regulatory framework.

What is an NBFC?

An NBFC (Non-Banking Financial Company) is a company registered under the Companies Act, 2013 and regulated by the Reserve Bank of India (RBI). While NBFCs offer many of the same services as banks—such as lending and investment—they cannot accept demand deposits or issue cheques drawn on themselves.

Entities seeking to start an NBFC must obtain an NBFC License from RBI in India and fulfill specific compliance and capital requirements.

Major NBFC Business Models in India

1. Loan Companies (LCs)

Loan companies are the most common type of NBFC. They provide a variety of loans, such as:

Personal loans

Business loans

Consumer durable loans

Working capital finance

These companies operate under strict RBI regulations, and obtaining an NBFC license online is the first step to entering this segment.

2. Investment Companies (ICs)

Investment NBFCs deal in the acquisition of securities and investments in shares, stocks, bonds, and debentures. They play a major role in capital markets and often act as holding companies.

To start an investment-focused NBFC, NBFC Registration in India is mandatory, followed by classification under the investment category.

3. Leasing and Hire Purchase Companies

NBFCs engaged in leasing offer equipment leasing services for assets like vehicles, machinery, and IT equipment. Hire Purchase Companies allow customers to pay in installments and gain ownership after final payment.

These NBFCs are popular among SMEs and startups looking for asset access without large upfront investments.

4. Microfinance NBFCs

These NBFCs lend small-ticket loans primarily to low-income households and microenterprises. Microfinance institutions help drive financial inclusion in rural and semi-urban India.

Online NBFC registration in India for microfinance institutions requires strict adherence to RBI’s capital and risk-based norms.

5. Infrastructure Finance Companies (IFCs)

IFCs provide long-term finance for infrastructure projects like roads, ports, power, and telecom. These NBFCs often work with government bodies and large corporates and require a high capital base and RBI clearance.

6. Asset Finance Companies (AFCs)

These NBFCs specialize in financing physical assets like automobiles, construction equipment, and commercial vehicles. They’re vital for supporting industries like logistics and construction.

To operate legally, an NBFC license from RBI in India is essential, along with regular compliance filings and audits.

7. NBFC-Factor

NBFCs registered under this model help businesses by purchasing their account receivables. This allows MSMEs to unlock cash tied up in unpaid invoices.

NBFC-Factors must go through NBFC registration online with the RBI and comply with specific factoring regulations.

NBFC Registration: A Quick Overview

To operate in any of the above models, a company must undergo proper NBFC Registration online in India. This includes:

Incorporation under Companies Act

Maintaining minimum Net Owned Fund (NOF) of ₹2 crores

Applying to RBI for licensing

Complying with KYC, AML, and periodic return filing

Consulting a professional NBFC Registration Consultant in India can simplify the application process and improve approval chances.

Why Choose a Consultant?

Given the complexities in NBFC License in India, engaging an experienced NBFC registration consultant can help in:

Drafting a proper business model

Preparing RBI-compliant documentation

Ensuring regulatory readiness

Fast-tracking NBFC license online approvals

Conclusion

NBFCs offer versatile business models that cater to India’s diverse and evolving financial landscape. Whether you’re planning to launch a loan company, leasing firm, or microfinance venture, obtaining an NBFC license from RBI in Indiais the first step.

By understanding the available business models and seeking expert guidance from an NBFC registration consultant, you can successfully navigate the regulatory journey and build a sustainable financial enterprise.

[stockedup]

Pros and Cons of Opening a Free Demat Account

India’s financial ecosystem has evolved dramatically over the past two decades. With the rise of digital platforms and online trading, investing has become more accessible than ever. One of the core components enabling this ease is the Demat account, which allows investors to hold shares and other securities in electronic format, removing the need for physical paperwork.

Among the many offers available today, "free Demat accounts" are often promoted to attract new investors. While these accounts may appear cost-free at first glance, it’s important to weigh both the benefits and potential downsides before making a decision.

What is a Demat Account?

A Demat (short for dematerialised) account is like an online vault for storing various investment instruments — including equities, mutual funds, bonds, and exchange-traded funds (ETFs) — in digital form. This eliminates the need for physical certificates and reduces the risk of loss or damage.

In India, Demat accounts are operated under the supervision of two major depositories: NSDL and CDSL. However, to open one, investors must approach a registered Depository Participant (DP), such as a bank, brokerage, or financial institution.

To attract beginners and retail investors, many DPs offer free Demat accounts, which usually come with waived account opening charges and sometimes temporary exemptions from annual maintenance fees (AMCs).

Pros of Opening a Free Demat Account

1. Affordable Way to Begin Investing

Free Demat accounts eliminate entry costs by waiving setup fees. Some also offer zero AMC for the first year or more, making it easier for first-time investors to start trading without financial burden.

2. Paperless Convenience

Since all holdings are stored digitally, there’s no risk of losing or damaging physical certificates. This also simplifies portfolio tracking, making it easier to monitor and manage investments through a single platform.

3. Speedy Transactions

With modern trading systems, most trades settle on a T+1 basis — meaning the settlement is completed the next day. This allows investors to access their funds or securities quickly and efficiently.

4. Multi-Asset Storage

A Demat account isn’t limited to equities. It can hold various instruments like mutual funds, sovereign gold bonds, corporate debentures, and ETFs, enabling diversification through one account.

5. Enhanced Safety

Digital records are much safer than physical documents. Features like two-factor authentication and secure login protocols reduce the chances of fraud or data loss.

6. Automatic Credit of Corporate Benefits

Dividends, bonus shares, rights issues, and stock splits are automatically credited to your account. There’s no need to apply or follow up for such entitlements.

7. User-Friendly Interfaces

Brokers typically provide intuitive mobile apps and desktop dashboards. These tools allow users to trade, set alerts, and analyze performance on the go.

Cons of Opening a Free Demat Account

While free Demat accounts offer many perks, they also come with certain trade-offs that every investor should consider.

1. Not Entirely Free

The term “free” can sometimes be misleading. While initial charges may be waived, some brokers introduce transaction fees or AMCs after a promotional period. It’s crucial to check the full pricing structure.

2. Limited Features

Free accounts often come with fewer tools or functionalities. Investors may miss advanced charting, intraday trading options, or in-depth research unless they upgrade to a paid version.

3. Inactivity Penalties

If your account remains dormant for a long time, it may attract inactivity fees or even risk deactivation. Passive investors should be aware of these conditions.

4. Gradual Increase in Charges

Though free initially, most accounts begin charging AMCs (typically between ₹200–₹1000) after the introductory period. These costs can add up, especially if you manage multiple accounts.

5. Security Concerns with Smaller Brokers

Not all brokers have the same level of cybersecurity. Lesser-known or newer players might cut costs by compromising on digital safety measures. It’s wise to stick to SEBI-registered DPs with a strong reputation.

6. Subpar Customer Support

Free offerings often mean limited customer service. When issues arise, slow response times or lack of human support can become a significant hurdle, especially for less experienced investors.

Quick Comparison: Benefits vs Drawbacks

How to Choose the Right Free Demat Account

Not all free Demat accounts are created equal. Here are some important criteria to consider:

Broker Reputation & SEBI Registration: Choose brokers registered with SEBI and linked to NSDL or CDSL.

Transparent Charges: Review the entire fee schedule, including hidden costs and post-offer AMCs.

User Experience: Try demo versions of their platform or app to gauge usability.

Support Services: Prompt and efficient customer support is critical, especially when trading during volatile markets.

Additional Features: Look for offerings like research reports, market alerts, margin trading, or loans against shares if needed.

Conclusion

A free Demat account is a practical option for newcomers looking to explore stock market investing without upfront financial commitment. It offers convenience, digital access, and a low-cost start. However, it's important to understand the complete cost structure and potential limitations before opening one.

Think about your investing goals — are you a casual investor or a frequent trader? Do you need advanced features, or are the basics enough? Comparing brokers, reading the fine print, and checking customer feedback can help you find the account that truly fits your needs.

FAQs

1. Are free Demat accounts truly free? Not always. While many waive the opening fee, AMCs and transaction fees might apply later. Review the full terms before signing up.

2. Can I hold multiple Demat accounts? Yes, you can open several Demat accounts using the same PAN. However, managing them effectively is key to avoiding confusion or extra fees.

3. Is it safe to open a Demat account online? Yes, as long as you choose a SEBI-registered broker associated with NSDL or CDSL. Always check reviews and verify credentials.

4. What documents are required to open one? Typically, PAN card, Aadhaar card, a bank account, and a passport-sized photo are required. Many brokers also complete KYC via video verification.

5. What happens if I stop using my account? Inactive accounts might attract fees or be temporarily frozen. Regular logins or small trades can help keep your account active.

6. Is a trading account also required? Yes. A Demat account stores your holdings, while a trading account facilitates buying and selling. Both are essential for stock market participation.

[pallavirajput74]

Non-Convertible Debentures: A Safe and Reliable Investment

[allthebrazilianpolitics]

Brazil's Rio+Saneamento to raise US$500mn in bonds

Brazilian water company Rio+Saneamento BL3, which is controlled by Grupo Águas do Brasil and Vinci Partners, began the process of issuing 2.5bn reais (US$500mn) in bonds partly to invest in works under its concession contract in Rio de Janeiro state.

The bonds, known locally as debentures, will be issued in two tranches, the company said in a statement.

The first tranche will be due in 20 years and is for 1.35bn reais, while the second will mature in 29 years and be for 1.15bn reais. The operation is expected to be concluded in December.

In December 2021, the company won the auction for block 3 to provide sanitation services in Rio de Janeiro after offering a fee of 2.2bn reais to the government. It assumed the contract in August 2022.

Continue reading.

[dollarsbag]

NTPC: Power giant seeks shareholder's nod to raise up to Rs 18,000 crore via bonds; voting begins 24 June

NTPC, the state-owned power giant, plans to raise up to ₹18,000 crore through private placement of bonds or non-convertible debentures (NCDs) in the domestic market. A postal ballot notice has been issued to seek shareholders’ approval via e-voting for the fundraising. The funds will support NTPC’s aggressive capacity expansion, working capital needs, and other corporate purposes.

[sonalj]

Tax Deducted At Source (TDS) - What is TDS, Meaning & Benefits

What is TDS (Tax Deducted at Source)? The TDS full form stands for Tax Deducted at Source. In simple terms, it is a process for collecting income tax at the source of income. It is deducted by the entity making the payment to another person. For example, your employer may deduct TDS from your salary. Similarly, a bank may deduct TDS from the interest income on your deposits. You can claim a TDS refund if the TDS collected is more than what you owe the government.

Types of TDS (Tax Deducted at Source) Various types of TDS are applicable based on the nature of the payment and the income. Here are the primary kinds of TDS along with their corresponding section numbers under the Indian Income Tax Act, 1961:

Salary (Section 192): The employer deducts TDS based on the income tax slab rates applicable to the employee’s estimated annual income. Interest on Securities (Section 193): TDS is deducted from interest income earned from debentures and bonds. Dividends (Section 194): Dividends paid by Indian companies to shareholders exceeding a specified threshold are subject to TDS. Rent (Section 194I): TDS is deducted on rent paid for land, buildings, plant, machinery, or equipment if the annual rent exceeds ₹2.4 lakh. TDS on Professional Fees (Section 194J): Payments made to professionals like doctors, lawyers, architects, and others attract TDS. TDS on Commission or Brokerage (Section 194H): Any payments for commissions or brokerage exceeding ₹15,000 in a financial year are subject to TDS. Winning from Horse Races (Section 194BB): TDS is deducted from winnings from horse races. Payment to Contractors/Sub-Contractors (Section 194C): TDS is calculated and withheld on payments made to contractors and subcontractors for carrying out any work, including the labor supply. Payment in respect of Life Insurance Policy (Section 194DA): If the amount is not exempt under Section 10(10D), TDS is also deducted from the proceeds of life insurance policies. Payment to Non-Residents (Section 195): Various payments made to non-residents, including interest, royalties, technical services, etc, attract TDS.

[stockmarketanalysis]

📊 Complete Guide to Debt to Asset Ratio (And Why It Could Make or Break Your Investments)

The Debt to Asset Ratio is one of the most revealing indicators of a company’s financial health. Whether you're an investor analyzing balance sheets or a business owner managing growth, this ratio helps answer one key question: How much of a company’s assets are financed by debt?

In this guide, we’re breaking it all down using real-world examples from the Indian stock market, trusted research, and expert insights. Plus, we’ll show you how to visualize financial ratios using tools like Strike Money.

🤔 What Is the Debt to Asset Ratio in Simple Terms?

At its core, the Debt to Asset Ratio measures the percentage of a company’s assets that are financed by debt rather than equity.

👉 Formula: Debt to Asset Ratio = Total Liabilities / Total Assets

If the ratio is 0.6, it means 60% of the company’s assets are financed through debt — the higher the ratio, the more leveraged the company is.

According to the Financial Accounting Standards Board (FASB) and Generally Accepted Accounting Principles (GAAP), liabilities include both short-term debt (like working capital loans) and long-term debt (like bonds or debentures).

🧮 How to Calculate the Debt to Asset Ratio Like a Pro

Let’s use a live example from the Indian stock market.

Take Tata Motors (NSE: TATAMOTORS). In FY 2024:

Total Liabilities: ₹2.75 lakh crore

Total Assets: ₹4.85 lakh crore

👉 Debt to Asset Ratio = ₹2.75 lakh crore / ₹4.85 lakh crore = 0.567

This means Tata Motors has financed about 56.7% of its assets with debt. You can quickly chart such ratios over time using Strike Money, which lets you visualize changes in leverage across financial years.

📈 What a High or Low Debt to Asset Ratio Really Tells You

🔺 High Debt to Asset Ratio (>0.6): Suggests a company is highly leveraged. It may be aggressive in using borrowed funds for expansion but is also at greater risk in economic downturns.

🔻 Low Debt to Asset Ratio (<0.4): Reflects conservative debt use. Investors may see it as financially stable but potentially under-leveraged.

Example: Infosys has consistently maintained a low ratio under 0.2, aligning with its zero-debt philosophy. Compare this with Suzlon Energy, whose high leverage contributed to its financial struggles during market downturns.

🧭 Is There a “Good” Debt to Asset Ratio? Let’s Look at Industry Benchmarks

There’s no one-size-fits-all.

🏭 Manufacturing & Capital Goods: Often show higher ratios (>0.6), due to capital-heavy operations. 🛒 Retail & FMCG: Tend to operate with lower debt, showing ratios around 0.3–0.5. 💻 IT Companies: Usually conservative, with ratios below 0.3.

According to a McKinsey report (2023), Indian companies that maintained a Debt to Asset Ratio below 0.5 outperformed the market in risk-adjusted returns over a 10-year period.

🔍 Debt to Asset Ratio vs Debt to Equity Ratio – Know the Difference

Both are leverage ratios, but they tell slightly different stories.

🧾 Debt to Asset Ratio = How much of assets are funded by debt 📊 Debt to Equity Ratio = How much debt a company uses relative to shareholders’ equity

Investors like Warren Buffett often look at both together to assess a company’s capital structure. In India, HDFC Bank maintains a balanced capital mix, with a conservative debt to equity ratio around 1.2 and a stable debt to asset ratio near 0.35 — a sign of financial discipline.

💼 How Companies Use This Ratio in Financial Strategy

Let’s take Larsen & Toubro (L&T) as an example. It uses strategic debt for infrastructure investments, keeping its ratio around 0.55 — which is optimal for its industry. The company ensures that debt stays manageable by focusing on projects with predictable cash flows.

Financial auditors like KPMG and PwC regularly evaluate this ratio during audits to assess a firm’s solvency.

🚨 Why This Ratio is a Red Flag (or Green Light) for Investors and Lenders

Lenders look at this ratio to evaluate creditworthiness. A higher ratio can mean:

⚠️ Greater chance of default ⚠️ Higher interest costs ⚠️ Lower eligibility for new loans

Equity investors use it to assess financial risk. For instance, in 2020, several Indian NBFCs with high debt to asset ratios (>0.9) faced credit downgrades by CRISIL.

🧱 Can You Improve the Debt to Asset Ratio Without Killing Growth?

Yes — and smart companies do it all the time.

💡 Sell non-core assets 💡 Refinance high-cost debt 💡 Improve asset turnover 💡 Boost retained earnings

In 2022, Vedanta Ltd. announced a restructuring to deleverage its balance sheet. The result? A 15% improvement in its debt to asset ratio within one year — which led to a rating upgrade and renewed investor interest.

📉 Common Mistakes People Make with This Ratio

🚫 Thinking all debt is bad 🚫 Ignoring the impact of asset revaluation 🚫 Comparing ratios across unrelated industries 🚫 Not adjusting for off-balance-sheet liabilities

According to Harvard Business Review, many early-stage investors overlook operating leases or contingent liabilities, skewing their interpretation of the actual leverage.

📌 Top Questions People Ask About the Debt to Asset Ratio

❓ Can the ratio be negative? No. Since total assets and liabilities are usually positive, the ratio is almost always a number between 0 and 1.

❓ Is this ratio useful for personal finance? Not directly. Personal finance uses a similar concept called the Debt to Income Ratio.

❓ How often should businesses track this? Quarterly is ideal — especially around earnings season or while seeking funding.

❓ Can a high ratio ever be good? In some cases, yes. Companies like Adani Ports have used debt aggressively for expansion but manage it with robust cash flows.

🧠 Real Insights: What Research Says About Debt Ratios

📚 A study by the Reserve Bank of India (RBI, 2022) showed that companies with debt to asset ratios above 0.65 had a 40% higher chance of default during recessions.

📊 According to Deloitte India, businesses that maintained moderate leverage (ratios between 0.45–0.55) had the best return on invested capital (ROIC) over 5 years.

These stats show that managing your debt to asset ratio isn’t just an accounting checkbox — it’s a growth strategy.

📉 Tracking This Ratio? Use Strike Money for Smarter Visuals

Monitoring ratios across multiple companies can get overwhelming. That’s where charting tools like Strike Money shine.

🛠️ With Strike Money, you can: ✅ Plot historical debt to asset ratios ✅ Compare across companies or sectors ✅ Set alerts for ratio spikes ✅ Analyze balance sheet components visually

This helps investors and analysts make faster, more informed decisions.

🎯 Final Word: The Silent Financial Alarm You Shouldn’t Ignore

Your Debt to Asset Ratio is more than a number — it's a window into the soul of a business. It reflects strategy, risk appetite, and future viability.

Too high? You may be betting the house. Too low? You might be playing it too safe.

In India’s dynamic markets — from startups to the Nifty 50 — staying aware of your debt levels isn't optional. It's essential.

Use this guide to track, interpret, and act. Because those who master debt management often win the long game.

✅ Ready to analyze your favorite companies’ financial ratios? Start visualizing with Strike Money today — it’s your smartest ally in balance sheet analysis.