Question

2nd puc accounts D R R expand

Answer 1

Answer:

Explanation:

A debenture redemption reserve (DRR) is a provision stating that any Indian corporation that issues debentures must create a debenture redemption service in an effort to protect investors from the possibility of a company defaulting. This provision was tacked onto the Indian Companies Act of 1956, in an amendment introduced in the year 2000.

A debenture is a debt security that lets investors borrow money at a fixed interest rate. This instrument is considered unsecured, because it is not backed by an asset, lien, or any other form of collateral.

A debenture redemption reserve is requirement imposed on Indian corporation that issue debentures, where they must create a debenture redemption service, to protect investors from the possibility of a company defaulting.

This rule offers investors a measure of protection, because debentures are not backed by an asset, a lien, or any other form of collateral.

The reserve must represent at least 25% of the face value of debentures issued.