A debenture is a type of long-term debt instrument used by companies and governments to raise capital. It is essentially a loan that investors provide to the issuer, who promises to pay back the principal amount along with interest over a specified period. Debentures are typically unsecured, meaning they are not backed by physical assets, but rather by the issuer's creditworthiness. Investors buy debentures for regular interest payments, known as coupon payments, which are usually fixed. They can be traded in the financial markets, allowing investors to sell them before maturity. Common types of debentures include convertible debentures, which can be converted into equity shares, and subordinated debentures, which have lower priority in case of liquidation.