{"id":11909,"date":"2026-02-24T12:49:50","date_gmt":"2026-02-24T12:49:50","guid":{"rendered":"https:\/\/goldenpi.com\/blog\/?p=11909"},"modified":"2026-05-26T14:10:51","modified_gmt":"2026-05-26T14:10:51","slug":"what-is-bearer-bond","status":"publish","type":"post","link":"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/","title":{"rendered":"What is a Bearer Bond? Meaning, Features, Risks &amp; How It Works"},"content":{"rendered":"\n<p><span style=\"font-weight: 400;\">In India, bearer bonds were introduced on January 12, 1981, under the Special Bearer Bonds Act, 1981. <\/span><i><span style=\"font-weight: 400;\">The purpose?<\/span><\/i><span style=\"font-weight: 400;\"> It was to bring unaccounted money into the formal system.\u00a0<\/span><\/p>\n\n\n\n<p>Bearer bonds were once a popular fixed-income investment instrument because ownership was determined simply by possession of the physical certificate. Unlike registered bonds, bearer bonds did not record the investor\u2019s name. Whoever held the bond certificate could claim the interest payments and principal amount.<\/p>\n\n\n\n<p>Today, bearer bonds are largely discontinued in many countries due to concerns related to tax evasion, money laundering, and lack of ownership tracking. However, understanding bearer bonds remains important for investors learning about the evolution of bond markets and fixed-income instruments.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Investors could buy such bonds without revealing their identity<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Received legal protection + tax immunity.\u00a0<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">The Government of India began selling bearer bonds on February 2, 1981, within India and from February 9, 1981, outside India. However, the sale was stopped on January 9, 1982, due to petitions filed in the Supreme Court of India, challenging the validity of the law.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">As of 2026, the issuance and trading of bearer bonds are illegal in India. <\/span><i><span style=\"font-weight: 400;\">Curious to learn more about this financial product? <\/span><\/i><span style=\"font-weight: 400;\">Read this article to understand <\/span><span style=\"font-weight: 400;\">what is bearer bond<\/span><span style=\"font-weight: 400;\">, why they appealed to investors, and the major risks associated with holding them.<\/span><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#What_is_Bearer_Bond\" >What is Bearer Bond<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#Why_Bearer_Bonds_Were_Attractive_to_Investors\" >Why Bearer Bonds Were Attractive to Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#What_were_the_Risks_Associated_With_Bearer_Bonds\" >What were the Risks Associated With Bearer Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#To_Conclude_Bearer_Bonds_Were_Possession-Based_Debt_Instruments_Sold_Until_January_9_1982\" >To Conclude, Bearer Bonds Were Possession-Based Debt Instruments Sold Until January 9, 1982<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#Citations\" >Citations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#What_are_Bearer_Bond_FAQs\" >What are Bearer Bond FAQs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#Disclaimer\" >Disclaimer:<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Bearer_Bond\"><\/span><span style=\"font-weight: 400;\">What is Bearer Bond<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A bearer bond is a type of debt security owned by the individual who physically possesses the bond certificate. The issuer does not maintain records of ownership.<\/p>\n\n\n\n<p>Interest payments are usually collected through attached coupons, which investors submit to receive periodic payments. Upon maturity, the holder can redeem the bond for its face value.<\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Now, let\u2019s understand how they worked.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">How Did Bearer Bonds Work?<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Bearer bonds were a type of loan given by investors to a government. In return, the issuer promised to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Pay interest every year<\/span>s<\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Repay the full amount at maturity<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">Let\u2019s see how it happened:<\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table class=\"has-fixed-layout\"><thead><tr><td><strong>A) Interest Payment Process (Coupons)<\/strong><\/td><td><strong>B) Principal Repayment at Maturity<\/strong><\/td><\/tr><\/thead><tbody><tr><td>* <strong>Physical Coupons:<\/strong> Bearer bonds came with literal sheets of paper coupons attached to the main certificate. Each coupon represented a single scheduled interest payment.<br><br>* <strong>The Clip &amp; Submit Method:<\/strong> To collect interest, the bondholder would physically clip the relevant coupon from the certificate and submit it to an authorized bank.<br><br>* <strong>No Questions Asked:<\/strong> The bank paid out the interest cash directly to whoever presented the coupon. No identity verification or proof of original purchase was required.<\/td><td>* <strong>End of Term Redemption:<\/strong> Once the bond reached its official maturity date, the investment period concluded.<br><br>* <strong>Surrendering the Certificate:<\/strong> The holder would bring the entire remaining physical bond certificate back to the issuer or an authorized financial institution.<br><br>* <strong>Final Payout:<\/strong> The issuer paid back the full face value (principal amount) printed on the certificate to the person holding it. Just like the coupons, ownership was entirely possession-based.<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<p><span style=\"font-weight: 400;\">In some cases, bearer bonds were also issued without any coupon rate. Such a bearer bond series had a:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Face value of \u20b910,000<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Maturity value of \u20b912,000<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Time period of 10 years<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">The investors did not receive yearly interest. Instead, the difference between the face value and maturity value (a premium of \u20b92,000) became the investor\u2019s gain.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Recent Post<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list is-grid columns-3 wp-block-latest-posts\"><li><div class=\"wp-block-latest-posts__featured-image aligncenter\"><a href=\"https:\/\/goldenpi.com\/blog\/gold-bonds\/gold-price-and-bond-market-in-india\/\" aria-label=\"Gold Price and Bond Market in India: Understanding the Relationship in 2026\"><img decoding=\"async\" width=\"1024\" height=\"445\" src=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05185007\/Gold-Price-and-Bond-Market-1024x445.png\" class=\"attachment-large size-large wp-post-image\" alt=\"Gold Price and Bond Market\" style=\"\" srcset=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05185007\/Gold-Price-and-Bond-Market-1024x445.png 1024w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05185007\/Gold-Price-and-Bond-Market-300x130.png 300w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05185007\/Gold-Price-and-Bond-Market-768x334.png 768w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05185007\/Gold-Price-and-Bond-Market-1536x668.png 1536w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05185007\/Gold-Price-and-Bond-Market.png 1774w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/div><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/goldenpi.com\/blog\/gold-bonds\/gold-price-and-bond-market-in-india\/\">Gold Price and Bond Market in India: Understanding the Relationship in 2026<\/a><\/li>\n<li><div class=\"wp-block-latest-posts__featured-image aligncenter\"><a href=\"https:\/\/goldenpi.com\/blog\/government-securities\/government-securities-in-india\/\" aria-label=\"Government Securities in India 2026: Types, How to Buy &amp; Why They Are a Safe Investment\"><img decoding=\"async\" width=\"1024\" height=\"444\" src=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05153858\/Government-Securities-G-sec-1-1024x444.png\" class=\"attachment-large size-large wp-post-image\" alt=\"Government Securities G-sec\" style=\"\" srcset=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05153858\/Government-Securities-G-sec-1-1024x444.png 1024w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05153858\/Government-Securities-G-sec-1-300x130.png 300w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05153858\/Government-Securities-G-sec-1-768x333.png 768w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05153858\/Government-Securities-G-sec-1-1536x666.png 1536w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05153858\/Government-Securities-G-sec-1.png 1774w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/div><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/goldenpi.com\/blog\/government-securities\/government-securities-in-india\/\">Government Securities in India 2026: Types, How to Buy &amp; Why They Are a Safe Investment<\/a><\/li>\n<li><div class=\"wp-block-latest-posts__featured-image aligncenter\"><a href=\"https:\/\/goldenpi.com\/blog\/investment-guide\/investing-in-power-sector-bonds-in-india\/\" aria-label=\"Investing in Power Sector Bonds in India: Risk Profile, PSU vs Private &amp; Who Should Buy\"><img decoding=\"async\" width=\"1024\" height=\"444\" src=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05150210\/Investing-in-Power-Sector-1024x444.png\" class=\"attachment-large size-large wp-post-image\" alt=\"Investing in Power Sector\" style=\"\" srcset=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05150210\/Investing-in-Power-Sector-1024x444.png 1024w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05150210\/Investing-in-Power-Sector-300x130.png 300w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05150210\/Investing-in-Power-Sector-768x333.png 768w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05150210\/Investing-in-Power-Sector-1536x667.png 1536w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2026\/06\/05150210\/Investing-in-Power-Sector.png 1774w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/div><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/goldenpi.com\/blog\/investment-guide\/investing-in-power-sector-bonds-in-india\/\">Investing in Power Sector Bonds in India: Risk Profile, PSU vs Private &amp; Who Should Buy<\/a><\/li>\n<\/ul>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Bearer_Bonds_Were_Attractive_to_Investors\"><\/span><span style=\"font-weight: 400;\">Why Bearer Bonds Were Attractive to Investors<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">One of the main advantages of bearer bonds was the \u201ccomplete privacy\u201d they offered. Since ownership was established only by holding the physical certificate, investors could:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Keep their financial holdings confidential<\/span>s<\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Avoid any external scrutiny of their investments or wealth.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">Additionally, some more advantages that bearer bonds offered were:<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">1. Simple and Direct Transfer of Ownership<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Bearer bonds were easy to transfer because ownership was \u201cpossession-based\u201d. If the holder wanted to transfer the bond, they could simply hand over the certificate to another person. There was no need to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Fill out transfer forms<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Notify the issuer<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Update ownership records<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">The new holder immediately gained full rights to receive future interest payments and the principal amount at maturity without any legal registration.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">2. Pre-Determined Returns<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Bearer bonds provided a pre-determined return. Depending on the series, the bearer bond either:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Paid regular interest through coupons\u00a0<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">or<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Offered a maturity value higher than the purchase price<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">This allowed investors to know in advance how much they would receive and when they would receive it.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_were_the_Risks_Associated_With_Bearer_Bonds\"><\/span><span style=\"font-weight: 400;\">What were the Risks Associated With Bearer Bonds<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">Bearer bonds carried the risk of \u201cpermanent loss\u201d. Since ownership details were not maintained, there was no way to prove who the original owner was. As a result, if the bond certificate was lost, stolen, or destroyed, the investor had no legal method to recover it.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Additionally, some other disadvantages of bearer bonds were:<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">1. High Potential for Illegal Use and Tax Evasion<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Bearer bonds allowed complete anonymity. This made them attractive for illegal activities, such as:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Hiding undisclosed income<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Avoiding taxes<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Transferring money without leaving any audit trail<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Money laundering<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">2. Risk of Forgery and Counterfeit Certificates<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Bearer bonds existed as \u201cphysical paper certificates\u201d. This made them vulnerable to forgery and counterfeiting. Fraudsters could:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Create fake bond certificates\u00a0<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Attempt to claim interest or maturity payments<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">Additionally, physical certificates were also exposed to damage from fire, water, or wear, which could make them unusable and result in financial loss.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"To_Conclude_Bearer_Bonds_Were_Possession-Based_Debt_Instruments_Sold_Until_January_9_1982\"><\/span><span style=\"font-weight: 400;\">To Conclude, Bearer Bonds Were Possession-Based Debt Instruments Sold Until January 9, 1982<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">So now you know <\/span><span style=\"font-weight: 400;\">what is bearer bond<\/span><span style=\"font-weight: 400;\">. They were debt instruments where the person holding the physical certificate was treated as the owner. As of February 17, 2026, such bearer bonds are not valid in India.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">The Special Bearer Bonds Act, 1981 was repealed, and the last such bonds were sold on January 9, 1982. Nowadays, regulations enforced by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) require all investments to be linked to \u201cverified investor identities\u201d as per Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.<\/span><\/p>\n\n\n\n<p><i><span style=\"font-weight: 400;\">Looking to make bond investments in 2026?<\/span><\/i><span style=\"font-weight: 400;\"> You may <\/span><a href=\"https:\/\/goldenpi.com\/corporate-bonds\"><span style=\"font-weight: 400;\">visit the GoldenPi platform<\/span><\/a><span style=\"font-weight: 400;\">. Here, you can access a wide variety of bond collections, such as <\/span><a href=\"https:\/\/goldenpi.com\/collections\/highly-rated-bonds\"><span style=\"font-weight: 400;\">highly-rated bonds<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/goldenpi.com\/collections\/bonds-for-short-term-investment\"><span style=\"font-weight: 400;\">short-term bonds<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/goldenpi.com\/collections\/state-government-guranteed-bonds\"><span style=\"font-weight: 400;\">state government guaranteed bonds<\/span><\/a><span style=\"font-weight: 400;\">, and more. Also, you can even <\/span><a href=\"https:\/\/goldenpi.com\/bond-ipo-online\"><span style=\"font-weight: 400;\">apply to the latest NCD IPOs<\/span><\/a><span style=\"font-weight: 400;\">. The process is 100% digital and can be completed online from the comfort of your home.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Citations\"><\/span><span style=\"font-weight: 400;\">Citations<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/incometaxindia.gov.in\/Communications\/Circular\/910110000000000201.htm\"><span style=\"font-weight: 400;\">Circular No. 454, dated 24-04-1986<\/span><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.livemint.com\/market\/bonds\/from-bearer-bonds-to-digital-securities-how-indias-fixed-income-investments-evolved-11762171949174.html\"><span style=\"font-weight: 400;\">From bearer bonds to digital securities \u2014 how India&#8217;s fixed-income investments evolved | Stock Market News<\/span><\/a><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Bearer_Bond_FAQs\"><\/span><span style=\"font-weight: 400;\">What are Bearer Bond<\/span><span style=\"font-weight: 400;\"> FAQs<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1779804337538\"><strong class=\"schema-faq-question\">Q<span style=\"font-weight: 400;\">1. What benefits were received by the holders of bearer bonds?<\/span><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400;\">The holders received the benefit of \u201ccomplete anonymity\u201d. The authorities could not question or investigate the source of funds used to buy these bonds. Additionally, they got \u201ctax immunity\u201d, where investors did not have to pay income tax, wealth tax, or gift tax on the amount invested.<\/span><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1779804350913\"><strong class=\"schema-faq-question\">Q2<span style=\"font-weight: 400;\">. How were bearer bonds transferred?<\/span><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400;\">If the original holder gave or sold the bond to another person, the new holder became the legal owner. Now, they could collect future interest and receive the principal at maturity. No registration, approval, or ownership update was required.<\/span><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1779804367645\"><strong class=\"schema-faq-question\">Q3. <span style=\"font-weight: 400;\">Are bearer bonds valid in 2026?<\/span><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400;\">No, the Special Bearer Bonds Act, 1981, was repealed, and the last series of bearer bonds was <\/span><a href=\"https:\/\/incometaxindia.gov.in\/Communications\/Circular\/Others\/910110000000000747\/dtc426jt.htm\"><span style=\"font-weight: 400;\">sold on January 9, 1982<\/span><\/a><span style=\"font-weight: 400;\">. In 2026, trading of bearer bonds is illegal.\u00a0<\/span><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1779804389534\"><strong class=\"schema-faq-question\">Q4. <span style=\"font-weight: 400;\">How was ownership decided in bearer bonds?<\/span><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400;\">A bearer bond did not carry the investor\u2019s name. Ownership depended entirely on possession. Whoever physically held the bond certificate was treated as the legal owner.<\/span><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1779804411792\"><strong class=\"schema-faq-question\">Q5. <span style=\"font-weight: 400;\">Is the profit earned by selling the bond at a higher price taxable?<\/span><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400;\">If a person bought a bearer bond and later sold it to someone else at a higher price, the resulting profit would not be treated as a capital gain. That\u2019s because bearer bonds are specifically excluded from the definition of \u201ccapital asset\u201d under Section 2(14) of the Income-tax Act.<\/span><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1779804432296\"><strong class=\"schema-faq-question\">Q<span style=\"font-weight: 400;\">6. Is the premium amount received at maturity taxable?<\/span><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400;\">When the bond reached maturity, investors received a premium on redemption. Under Section 10(15)(ib) of the Income-tax Act, 1961, this premium is tax exempt.\u00a0<\/span><\/p> <\/div> <\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disclaimer\"><\/span><strong>Disclaimer:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Bonds or non-convertible debentures (NCDs) are regulated by the Securities and Exchange Board of India and other government authorities. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.<\/span><\/p>\n\n\n\n<script type=\"application\/ld+json\">\n[\n  {\n    \"@context\": \"https:\/\/schema.org\",\n    \"@type\": \"NewsArticle\",\n    \"@id\": \"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/#newsarticle\",\n    \"mainEntityOfPage\": {\n      \"@type\": \"WebPage\",\n      \"@id\": \"https:\/\/goldenpi.com\/blog\/bond-news\/what-is-bearer-bond\/\"\n    },\n    \"headline\": \"What Is Bearer Bond? 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