[Opinion] Debenture Disclosure Requirements under AS, Ind AS & Schedule III

CA Bhawna Grover – [2025] 178 taxmann.com 655 (Article)

1 Introduction

Debentures remain a widely used instrument for raising long-term funds, offering companies flexibility in structuring financing and providing investors with steady returns. However, the accounting and disclosure requirements around debentures are detailed and vary depending on whether a company reports under Accounting Standards (AS), Indian Accounting Standards (Ind AS), or Schedule III of the Companies Act, 2013.

For stakeholders such as investors, regulators and auditors, clear disclosures are crucial to assess a company’s debt profile, conversion obligations and overall financial health. Let’s look at the key disclosure requirements.

2. Presentation of Debentures under Schedule III

Companies are required to provide a detailed classification and disclosure of their borrowings to ensure transparency and inform stakeholders about the nature and security of their debt in the manner below:

(a) Borrowings are classified into:

- Bonds or Debentures
- Term loans (banks/others)
- Deposits
- Related party loans
- Liability component of compound instruments, etc.

(b) Within each category, a further split is required between Secured and Unsecured borrowings.

(c) For secured debentures, the nature of security must be disclosed.

As per Schedule III, companies are required to disclose:

(a) Nature of debentures like secured or unsecured, convertible or redeemable etc.
(b) Terms of redemption or conversion, shown in descending order of maturity/conversion date i.e. disclose debentures in descending order of maturity. The farthest redemption or conversion date should be listed first.
(c) Where redemption is in instalments, the earliest due date is to be considered.
(d) Particulars of any debentures redeemed but with reissue power available.
(e) Unpaid matured debentures and related interest as part of Other Financial Liabilities.
(f) Period and amount of default in repayment of principal or interest on debentures as on the balance sheet date should be separately disclosed.

The following extracts from annual reports of listed companies illustrate how these disclosure requirements for debentures are presented in practice.
(a) The below extract is from the annual reports of Reliance industries Limited and Tata Motors Limited for FY 2024-25, reflecting the nature of debentures along with their disclosure in descending order of maturity.