How do you sell a bond before it ends?

1Where do I actually sell this?

On 21st May 2025 a reader was looking at a government bond on offer at an RBI auction through his broker, the route chapter 7 called door 4. Before deciding, he asked what would happen when he wanted his money back:

Given the condition of the liquidity of the Gsec in the secondary market - extremely illequid, where do I actually sell these bonds ? At this point it seems like I can buy the bonds from Primary Market but cannot sell there. Buy it from Secondary market, but selling would be painful coz of limited liquidity. What are my options here to sell these bonds ?

Rahul_Roy, TradingQnA, 21st May 2025

By 13th Oct 2026, 5,759 people had opened that thread. The short answer to him is yes, you can sell before the bond ends. There are 5 ways, and which one you use depends on where your bond sits and what kind of bond it is.

How easily a bond sells is called its liquidity. A liquid bond sells quickly, in the amount you hold, near what it is worth. A gold coin and a wedding lehenga can cost the same, but the coin sells at any jeweller by the evening while the lehenga needs a buyer who wants that exact one. Some bonds are gold coins. Many are lehengas, and those need a little more patience and the right way out.

The chapter starts with your bond: section 2 matches it to its ways out, and sections 3 to 7 take each way step by step. Section 8 shows how to set a fair price, section 9 which bonds sell fastest, and section 10 what to check before your next purchase. Section 11 explains, in brief, why selling a bond takes longer than selling a share.

You can sell a bond before it ends. There are 5 ways, and the right one depends on where your bond sits and what kind it is.

So the first step is to find where your bond sits.

2Which ways are open to your bond?

Open your demat holdings and your Retail Direct account, if you have one, and find the bond. Then match it here:

Where the bond sits decides the ways out. Demat bonds sell on the exchange, app bonds can go back to the app, and Retail Direct bonds sell on the RBI's screen.

The first way works for every bond in demat, and it lives in the broker app you already use.

3Way 1: a limit order on the exchange

Bonds in your demat account can be sold on NSE or BSE like a share, from 1 unit. The one difference: you set the price. Zerodha's support page says so for government bonds:

You cannot place market orders for G-secs due to their illiquidity. You must use limit orders only.

Zerodha support, "Can G-sec investments be exited before the maturity period?"

A limit order sells only at your price or better. Step by step:

1. Check when the bond last traded. Your app shows the last traded price, but not always how old it is. Look up the date before you trust the price.
2. Look at market depth. The buy orders waiting in the order book are the buyers you can sell to right now.
3. Find a fair price. Section 8 shows where. Turn it into a yield (chapter 3) so you know what the buyer earns.
4. Place the order at or near that fair price. The price already includes accrued interest (chapter 4), so you are paid the interest earned so far.
5. If it does not fill, check again the next day and lower the price a little at a time. In a quiet bond, a sale can take a few days.

Once it sells, the money reaches your trading account the next working day, T+1.

TrapThe last traded price can be very old. A reader in 2021 found a government bond showing 102: "Last trade at that price happened on 1st Sep 2020 and nothing after it" (Akash_Shah, TradingQnA, 26th Apr 2021). Set your price from a fair value, not from an old trade.

To sell on the exchange, check the last trade date and the buy orders, set a limit price near fair value, and adjust it a day at a time if it does not fill.

If you bought on a bond app, the quickest buyer is often the app itself.

4Way 2: sell back to the app

In June 2023 a reader who had bought a company bond on an app needed the money for a situation at home:

There are no buyers of the bond on the secondary market so I am not able to sell the bond. Is there any other way of exiting the bond?

agent_vinod, TradingQnA, 15th Jun 2023

He asked the platform, and it offered to buy the bond back. Many bond apps do this for the bonds they sold. Step by step:

1. Ask the app for a buyback quote, through its sell or support page.
2. Compare the quote with a fair price (section 8), and with any buy orders for the same ISIN on the exchange.
3. Send the bond. The app may ask for a delivery instruction slip, the form that tells your depository to move the bond out of your demat account, as it asked this reader.
4. Receive the money once the bond reaches the app.

TrapThe app sets the buyback price, and no SEBI rule was found that makes it buy back at all. Ask before you buy whether it will, and how it prices it.

A bond app will often buy back what it sold. Get its quote, compare it with a fair price, and send the bond with a delivery instruction.

Government bonds in Retail Direct have their own buyers, the RBI's primary dealers.

5Way 3: Retail Direct's trading screen

A government bond in your Retail Direct account sells on the portal's own trading screen, a corner of NDS-OM, the RBI's trading system for banks (chapter 7). There you can place a sell order in the odd lot market, or ask for a quote.

The buyers are primary dealers, the banks and firms that underwrite the government's auctions. Since 4th Jan 2022 the RBI's market making circular has asked them to quote to Retail Direct holders: they "may provide buy/sell quotes for liquid securities throughout market hours", and a request for a quote "may be responded to by the PDs with a market-relevant quote". The trading screen has grown quickly: ₹6,667 crore changed hands on it in 2025-26 alone (chapter 7).

If the screen offers no good price, a second route opened on 7th Nov 2025: move the bond to your demat account and sell it on the exchange, way 1.

Retail Direct bonds sell on the portal's own screen, where primary dealers are asked to quote. Since 7th Nov 2025 they can also be moved to demat and sold on the exchange.

Some newer company bonds come with a buyer built in.

6Way 4: a Liquidity Window

Since 1st Nov 2024, SEBI has allowed a company to offer a Liquidity Window: set days on which holders can sell the bond back to the company itself. The company decides at the start whether to offer it, and only on new bonds. SEBI made it with retail investors in mind.

• The first window opens at least 1 year after the bond is issued. Each window lasts 3 working days, every month or every quarter.
• The company can open it to all holders or only to small ones, those with ₹2 lakh or less of face value. The bond must be in demat.
• The price is the bond's valuation on the day before the window opens, less at most 1%, plus accrued interest. The money arrives within 1 working day of the window closing.
• Over the bond's life, the company must accept at least 10% of the issue this way. If more people want out in one window than its limit allows, each gets a share.

Plate 8.1

How a Liquidity Window works

SEBI's rules for new company bonds that offer one, in force since 1st Nov 2024

To use one, check your bond's offer document for a Liquidity Window and its dates, then follow the process it sets out during the window. No published count of how many issues offer one was found by 13th Oct 2026, so look it up for your own bond.

A Liquidity Window lets you sell a new company bond back to the company on set days, at no more than 1% below its valuation. Check the offer document to see if yours has one.

And every bond has one exit that never fails.

7Way 5: hold it to the end

On the maturity date the issuer repays the face value, whatever the screen showed along the way, and the coupons keep coming until then. For a government bond or a Treasury bill, that payment is the safest in Indian finance. For a company bond, it depends on the company, which a later chapter shows how to judge.

The screen can make this hard to believe. In August 2023 a reader bought a 91 day Treasury bill at an RBI auction for ₹98.36, then watched its price fall after it listed:

at the end of 91 days, will the holding price will come to Rs.100 or due to market fluctuation we can not guarantee that. The reason is after it got listed, 2% drop in price.

nmuthu, TradingQnA, 4th Aug 2023

One small cheap trade had set the price on his screen. It changed nothing he would receive: a Treasury bill pays ₹100 a unit at the end, whatever its screen showed in between.

Holding to maturity always works. The face value comes back on the last day, and a screen loss before then is only a loss if you sell.

Ways 1 to 3 all need a price, and the price on your screen is not always the right one.

8How to set a fair price

When a bond does not trade, its fair value is still worked out every day, because mutual funds must value every bond they own every evening.

Government bonds and state loans. Financial Benchmarks India, or FBIL, has published the official daily valuation since 31st Mar 2018. Look up your bond's price on FBIL's website. That is a sound starting point for a limit order.

Company bonds. There is no single public price. Compare 3 things: the last few trades in the same ISIN and their dates, the yields of similar bonds from issuers with the same rating and about the same years left, and the price your bond app quotes for the same ISIN. A price whose yield sits close to those similar bonds is fair.

Expect to sell a little below the fair value. Official valuations are built from trades of ₹5 crore and more, and NSE's data arm says in its pricing method that "trades below 5 crores and trades reported as odd lot are not considered". A buyer of a small lot usually wants a small discount for taking it.

For government bonds, start from FBIL's daily price. For company bonds, compare recent trades, similar bonds and the app's quote. Expect a small discount for a small lot.

Some bonds need no patience at all, because they are where most of the buyers are.

9Which bonds sell fastest

Among government bonds, trading crowds into one bond, the benchmark, usually the newest 10 year bond, whose yield is the one quoted on the news (chapter 5). In January to March 2026 the benchmark, the 6.48% GS 2035, was 50.8% of all outright trading in central government bonds, according to the Ministry of Finance's quarterly debt report. The top 10 bonds together were 78.7%.

Plate 8.2

One bond, half the market

Share of outright trading in central government bonds, January to March 2026

The benchmark and the few bonds just behind it sell on almost any working day, close to fair value. Treasury bills are short, so holding them to the end is rarely a long wait. Company bonds, state loans and older government bonds sell slower, and the ways in sections 4 to 6 matter more for them.

The benchmark government bond sells fastest. In January to March 2026 it was half of all government bond trading.

The easiest sale is the one you plan for before you buy.

10Before your next purchase: 6 checks

Pick a maturity that ends before you need the money, and check before you buy how the bond trades and who will buy it back.

The 5 ways work. They are slower than selling a share, for reasons worth knowing.

11Why a bond sells slower than a share

Fewer trades. On 20th Aug 2026 a SEBI whole time member said that "of nearly 33,000 outstanding instruments, only around 400 to 500 trade on a typical day" (SEBI speech). Even a central government bond, the 7.69% GS 2043, went from 27th Jul to 28th Sep 2026 without a trade on the exchange.

Many places, not one. Every buyer and seller of a share meets in the same order book on NSE or BSE. A bond is sold through 6 doors (chapter 7) and traded on separate screens, so its buyers are split up and each screen is thinner.

Big lots elsewhere. Banks and institutions trade government bonds in ₹5 crore lots on the RBI's screen, and the RBI's primer notes that small investors "may get a quote/price, which is worse than the price for standard market lots".

Buyers who hold. SEBI's Liquidity Window circular puts the low trading partly down to "a large number of institutional investors holding such bonds to maturity".

No market maker yet for company bonds. The Union Budget of 1st Feb 2026 proposed one, and on 20th Aug 2026 SEBI said it was "currently working on its design".

The last chapter of this module looks at these problems in full, at the fixes India has tried so far, and at what could still work.

A bond sells slower than a share because it trades less, in more places, mostly in big lots between institutions that hold to the end. The ways in this chapter still get you out.

To Rahul_Roy: a government bond bought at an auction lands in your demat account. Sell it with a limit order on the exchange, priced from FBIL's daily value. If it is the benchmark, buyers are there most days; if not, give it a few days. Bought through Retail Direct, it sells on the portal's screen.

To agent_vinod: the app's buyback was the right first call. Compare its price with similar bonds before you send the delivery instruction.

Where to find today's figures

Every figure in this chapter is dated. This is where to find the current one.