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In this video, the narrator uses a relatable scenario to explain the concept of debentures. They start with a personal example of borrowing money from a friend to buy jeans, which represents informal borrowing in a friendship. This is then contrasted with a business scenario where a company seeks to expand and needs additional capital. The company collects funds from investors or financial institutions, promising to repay the loan with interest; this formal lending arrangement is referred to as debentures. The video aims to cover how debentures work, their types, advantages, disadvantages, and more details on the topic.