Reliance Industries to Raise ₹15,000 Crore Through NCDs: The Business of Borrowing, the Psychology of Investors and the Hidden Cost of Corporate Debt

When India’s biggest corporate groups borrow money from the market, ordinary investors must understand what they are buying, why companies are borrowing and who ultimately carries the financial risk.

Imagine a company with a market valuation running into several lakh crore rupees, thousands of crores in annual profits and businesses spread across multiple sectors. Yet, instead of raising additional money by selling its shares, it decides to borrow ₹15,000 crore from the financial market.

Why would a financially powerful company choose borrowing over selling ownership? Why would investors willingly lend their hard-earned money to a company in exchange for a predetermined return? And what happens if the company’s financial circumstances change over the next five, seven or ten years?

These questions bring us to an important but relatively less understood financial instrument: Non-Convertible Debentures (NCDs). The recent fundraising announcement by Reliance Industries Limited (RIL) is an excellent opportunity for ordinary investors to understand this instrument, its commercial importance and the psychological factors influencing both corporate borrowing and investment decisions.

1. What Exactly Has Reliance Industries Announced?

On 30 October 2026, Reliance Industries announced that its Board of Directors had approved an enabling resolution authorising the issuance of listed, secured or unsecured, redeemable Non-Convertible Debentures of up to ₹15,000 crore. The proposed fundraising will be undertaken through the private placement route, in one or more tranches. The announcement accompanied the company’s September-quarter FY2026-27 financial results.

Some important figures reported for the September 2026 quarter, as published in the results and press coverage (rounded):

• Net profit attributable to shareholders: ₹25,548 crore, against ₹18,165 crore in the corresponding quarter of the previous year. Total consolidated profit after tax, including minority interests, was about ₹29,550 crore.
• Revenue from operations: approximately ₹3.33 lakh crore, about 29% higher year on year.
• EBITDA: approximately ₹62,400 crore, about 24% higher year on year.
• EBITDA margin: 17.2%, compared with 17.8% a year earlier.

Another important figure is that Reliance’s outstanding NCDs stood at approximately ₹39,389 crore as of 30 September 2026, before adjustments for prepaid finance charges and fair valuation, of which approximately ₹20,000 crore were secured NCDs. The company had also issued approximately ₹12,000 crore of listed, unsecured, redeemable NCDs (PPD Series Q) through private placement during the September quarter. After the quarter ended, a further unsecured tranche (Series R) of about ₹13,008.6 crore at a 7.90% coupon was allotted on 1 October 2026, according to exchange filings reported in the press.

An important clarification: the newly approved ₹15,000 crore is an authorisation ceiling. It does not mean that the entire amount has already been raised or that a retail public issue has opened. The announcement does not yet establish the final coupon rate, maturity, repayment schedule, security arrangements or intended deployment of the proposed funds. This distinction matters because financial headlines often create the impression that a fresh investment opportunity has become available to everyone. Confirm figures on the company’s exchange disclosures before relying on any number.

2. What Is an NCD and How Does It Work?

A Non-Convertible Debenture is essentially a loan taken by a company from investors through a financial security. Instead of approaching a bank for a traditional loan, a company issues debentures and invites eligible investors to lend it money. In return, the company agrees to pay interest according to the terms of the instrument and repay the principal on the specified maturity date.

The word “non-convertible” is particularly important. Some debentures can be converted into equity shares under predetermined conditions. An NCD cannot be converted into the company’s equity shares. The investor therefore becomes a creditor of the company, not its shareholder. Suppose a company issues an NCD with these hypothetical terms:

• Face value: ₹10,000
• Interest rate: 9% annually
• Tenure: 5 years
• Interest payment: annually; principal repayment: at maturity

An investor purchasing one such NCD would receive ₹900 annually as interest, subject to the terms of the issue. At the end of five years, the investor would receive the original ₹10,000 principal, provided the company fulfils its repayment obligations. The investor earns periodic income without participating directly in the company’s profits or losses, but also does not receive the benefit of a rise in the company’s share price. This is the fundamental difference between lending money and owning a business.

3. Secured vs Unsecured NCDs: Where Does the Real Risk Lie?

Secured NCDs are backed by specified assets or security created in favour of debenture holders through the applicable legal arrangements. If the company defaults, the debenture trustee can take appropriate steps to enforce the security, subject to the legal process and priority of claims. However, secured does not mean risk-free. The value of the security, asset coverage, ranking of charges and competing claims all matter.

Unsecured NCDs do not have specific assets pledged for repayment. Investors depend primarily on the company’s overall financial strength and its ability to generate sufficient cash flows to meet interest and principal obligations. In a default or insolvency situation, unsecured creditors may face greater recovery uncertainty.

Reliance’s October announcement allows both secured and unsecured NCDs. Investors must therefore examine the actual terms of each tranche rather than assume that every debenture issued by a reputed company carries the same protection.

4. Why Do Large Companies Prefer NCDs to Bank Loans?

Corporate borrowing is not necessarily a sign of financial weakness. It can be a deliberate financial strategy. Large companies need enormous capital to expand, modernise infrastructure, acquire assets, refinance existing obligations and meet long-term commitments. There are several reasons they may prefer NCDs:

• Diversification of borrowing sources: a company that depends entirely on banks exposes itself to their lending policies, interest rates and credit limits. The debt market is another financing channel.
• Control over ownership: issuing more equity can dilute existing shareholders. NCDs raise capital without giving away additional ownership or voting rights, an important consideration for promoters who want to retain control.
• Planning and repayment flexibility: debentures can be structured with different maturities and interest-payment arrangements to match expected cash flows and investment needs.
• Access to institutional investors: insurers, mutual funds, pension-related institutions and banks can invest in corporate debt, giving the company a wider pool of capital than a bank loan alone.
• Managing the cost of capital: if the expected return from deploying borrowed money is higher than the effective borrowing cost, debt can improve shareholder returns. That works only when business assumptions are correct and cash flows materialise. Cheap borrowing can become an expensive mistake when expected returns fail to arrive.

5. Why Does Reliance Need Another ₹15,000 Crore?

This is perhaps the most important question arising from the announcement, and it is the one many readers ask when they see profits rising sharply and the company still borrowing. Reliance operates across oil-to-chemicals, retail, digital services, new energy and other infrastructure-related activities, a diversified business that needs continuous capital. Its requirements may arise from:

• Expansion and modernisation of existing businesses.
• Infrastructure development and capacity enhancement.
• Investments in technology and new business opportunities.
• Refinancing or restructuring existing borrowings.
• Working capital and general corporate requirements.

However, it is important not to assume that the newly authorised ₹15,000 crore has been earmarked for any particular project. The announcement has not established how the proceeds will be used. The proposed authorisation, if fully utilised, would increase the company’s NCD funding exposure, but the actual effect on total debt cannot be found by simply adding ₹15,000 crore to the existing ₹39,389 crore. We must also look at repayments, refinancing, other borrowings and the overall balance sheet.

For investors, the right question is not merely how much money Reliance is borrowing. It is whether the company can generate sufficient future cash flows to service and repay all its financial obligations comfortably. A strong cash position alongside large borrowings is common in big groups, so “is Reliance debt free?” has a simple answer: no large group is entirely free of borrowings, and what matters is the ability to service them. The same corporate ambition is traced in the Ambani business strategy.

6. NCDs vs Public Issues: Understanding the Difference

Many ordinary investors confuse an NCD issue with an IPO or another public issue. Although all of them raise money through the capital market, their financial nature is fundamentally different. The recent excitement around the Jio Platforms IPO is a useful contrast.

Particulars	NCD	Equity IPO
Nature	Debt	Ownership
Investor status	Creditor	Shareholder
Return	Contractual interest	Dividends, if declared, and capital appreciation
Principal repayment	As per maturity terms	No routine repayment
Conversion into equity	Not permitted	Already equity
Voting rights	Generally none	Attached to equity shares
Business risk	Credit and interest-rate risk	Business and market risk
Upside potential	Limited to agreed returns	Potentially substantial

An NCD public issue is also possible, in which a company invites the general public to subscribe to its debt securities. However, Reliance’s current ₹15,000 crore proposal is specifically through private placement, not a public issue. A private placement is directed towards identified and eligible investors rather than being an open invitation to the general public. Privately placed NCDs can be listed and traded on the exchange, subject to applicable conditions, so private placement and listing are not contradictory; the difference lies in how the securities are first offered and how they trade afterwards. Many are issued at a high face value, often ₹1 lakh or more, and trading volumes can be thin, so a retail buyer may find it hard to sell.

7. Why Do Investors Purchase NCDs?

The psychology of an investor is often different from that of a corporate borrower. A company thinks about expansion, cost of capital, control, competition and future profitability. An individual investor frequently thinks about the safety of savings, regular income and protection from market volatility. People who have spent their working lives earning salaries often prefer a reasonably predictable return rather than exposing savings to unpredictable stock-market movements. NCDs attract such investors for several reasons:

• Regular income: interest may be received periodically, depending on the payment structure.
• Reputed company: people feel comfortable lending to a recognised corporate group.
• Diversification: NCDs can be an alternative to bank deposits, government securities and equity.
• Fixed-income preference: retired people and conservative investors may prefer contractual interest payments.
• Potentially attractive returns: some corporate debt offers higher yields than bank deposits because it carries additional credit and liquidity risk.

But there is a dangerous psychological trap: many investors confuse a famous company with a risk-free investment. A strong brand may create confidence, but it does not eliminate the possibility of business losses, cash-flow problems, restructuring or default. The name of the company should initiate the investigation, not end it. The same pull towards a reassuring story is discussed in the psychology of the losing investor.

8. The Hidden Psychology of Corporate Borrowing

Promoters generally want to expand their businesses while keeping control of ownership. Equity fundraising may bring additional shareholders and dilute existing ownership; debt allows the company to access capital while retaining its ownership structure. That makes borrowing attractive.

However, management must resist another temptation: to borrow continuously because money is available. When conditions are favourable, management may become optimistic about growth and take on more debt. If the investments generate the expected returns, shareholders benefit. But if market conditions deteriorate, commodity prices fluctuate, demand weakens or new projects take longer than expected, the same debt becomes a financial burden. Interest obligations do not disappear merely because profitability declines. A business may survive a temporary fall in profits, but excessive debt combined with weak cash flows can create long-term stress. Corporate financial discipline matters as much as corporate ambition.

9. What Happens Over the Long Term?

NCDs create a financial relationship that continues for years. The company receives money today but accepts an obligation to pay interest and return the principal in the future.

For the company: interest becomes a recurring commitment; repayments must be managed alongside capital expenditure and operating expenses; higher debt can increase leverage and refinancing risk; credit ratings may improve or deteriorate; and excessive borrowing can restrict future investment flexibility.

For investors: they receive interest according to the contractual terms, remain exposed to the company’s creditworthiness, may see the market value of the NCD fluctuate if interest rates or credit perceptions change, may face difficulty selling before maturity, and may find recovery uncertain in case of default.

One particularly important issue is the maturity concentration of debt. Imagine a company issuing several large NCDs with repayment dates in the same financial year. Even a financially sound company may face pressure if it has to arrange a substantial amount of cash in a short period. This is why responsible companies spread borrowing and repayment obligations across different maturities.

10. How Interest Rates Influence NCD Investors

Suppose an investor buys a five-year NCD with an annual coupon of 9%. After two years, market interest rates rise and newly issued comparable corporate debt offers 11%. The investor’s existing NCD becomes less attractive, and if it is sold in the secondary market, the price may fall. The opposite may happen when market rates decline. An investor who holds to maturity and receives all contractual payments is in a different position from one who wants to sell early. This is called interest-rate risk, and the wider rate cycle is explained in our guide to the repo rate.

Another important concept is yield. Coupon rate and yield are not always the same: the coupon is calculated on the face value, whereas yield depends on the purchase price, interest payments and remaining maturity. Understand this difference before comparing different NCDs.

11. The Credit-Rating Trap: Why AAA Is Not a Guarantee

Rating agencies assess a company’s ability to meet its financial obligations and assign ratings such as AAA, AA and A. A higher rating generally indicates a stronger assessed capacity to meet obligations. However, ratings are opinions, not guarantees, and a company with a strong rating today may see its position deteriorate in the future. Investors should examine:

• The rating assigned to the specific NCD.
• The latest rating rationale and any outlook or rating watch.
• The company’s total borrowings, interest coverage and debt-service capacity.
• Cash flow from operations and existing repayment commitments.
• Security cover for secured NCDs, and the investor’s position in an insolvency.

Never purchase an NCD merely because a sales representative says it is highly rated. Read the rating rationale and the offer or placement document.

12. How Should Ordinary Indian Investors Approach NCDs?

Indian households have traditionally placed considerable faith in bank deposits, Post Office savings schemes and other familiar fixed-income instruments. Corporate NCDs may offer an additional opportunity, but they should not be treated as identical to bank fixed deposits. Bank deposits have their own regulatory framework and deposit-insurance protection, up to ₹5 lakh per depositor per bank under DICGC. Corporate NCDs do not enjoy DICGC insurance. A simple comparison, expanded in stock market versus conventional investments, is that FDs favour safety and NCDs favour returns, at the price of more risk.

The NCD investment checklist

1. Identify whether the issue is a public issue or a private placement.
2. Check whether the NCD is secured or unsecured.
3. Examine the credit rating and its latest rationale.
4. Compare the coupon rate with the effective yield.
5. Understand the maturity and interest-payment schedule.
6. Check the company’s total debt and cash-flow position.
7. Examine the security cover and debenture trustee arrangements.
8. Understand premature sale, liquidity and market-price risks.
9. Calculate the post-tax return; interest is taxed at your slab rate, so confirm current rules with a qualified adviser.
10. Invest only money that is not required for immediate household obligations.

For retired individuals, the temptation to earn an additional 1–2% over a bank deposit can be particularly strong. But an extra return should always be evaluated against the additional risk. The purpose of investment is not simply to earn more interest. It is to protect the financial security built through years of hard work. Retail investors can also gain indirect exposure through debt mutual funds, or through brokers and bond platforms, each with its own costs and minimum amounts.

13. The Larger Message: Borrowing Is a Tool, Not a Sign of Weakness or Strength

The Reliance announcement also helps us understand the financial architecture of modern India. Banks are not the only institutions financing businesses. The corporate debt market connects companies requiring capital with investors looking for income, reduces the exclusive dependence of businesses on bank lending and helps deepen the country’s financial markets.

However, the growth of the debt market also requires financially literate investors who can distinguish between a good company, a good investment and a suitable investment. These are three different things. A company may be excellent, but its NCD may offer an unattractive return. An NCD may offer a high coupon, but the underlying risk may be excessive. A financially strong company may issue unsecured debt, but the investor must still understand the legal priority and recovery implications. Financial decisions must be based on the terms, valuation, risk and suitability of the instrument, not merely the reputation of the issuer.

Conclusion: Do Not Lend Your Lifetime Savings Merely Because You Recognise the Company’s Name

Reliance Industries raising up to ₹15,000 crore through NCDs is not simply another corporate fundraising headline. It is a practical lesson in how money moves between businesses and investors. The company needs capital to manage its financial and business requirements. Investors want income from their accumulated savings. The debt market brings these two interests together, but the relationship comes with responsibilities.

The company must use borrowed money productively and maintain the ability to repay it. Investors must understand that the interest they receive is compensation for lending their money and accepting credit, liquidity and market risks. For ordinary Indians, especially those approaching retirement, the most important lesson is this: a famous company can attract your money, an attractive interest rate can influence your decision, and a high credit rating can create confidence, but only an informed assessment of risk can protect your financial future.

Never confuse the financial strength of a corporate brand with a guarantee of the safety of your personal savings. The money you invest may represent decades of hard work, family sacrifices and future security. It deserves more than a decision based on a headline.

This article is general information, not investment, tax or legal advice. Figures are rounded from company results and press reports; rates, ratings and rules change, so verify current details from official disclosures and consult a qualified adviser before investing.

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