A holder of a negotiable instrument (commercial paper such as bill of exchange, check/ cheque, etc.) who acquired its title in good faith, i.e., in the ordinary course of business and without notice of any defect in title such as being previously dishonored. Defect includes cases of forgery, alteration, incompleteness, etc.

The holder takes the instrument, knowing that it is complete and regular upon its face. In other words, the holder, at the time the instrument was negotiated, had no knowledge of any infirmity in the instrument or defect in the title of the parry negotiating it (the previous possessor). For a demand instrument (an instrument payable on demand), the holder will not be deemed a bona fide holder if negotiation takes place after the passage of unreasonable time after its issue.

Moreover, if the holder has was aware of any infirmity in the instrument or defect in the title of the party holding it then, and before payment of the full amount negotiated between the two parties, the would-be new holder is a bona fide holder only to the amount he/ she paid before attainment of such knowledge.

Bona fide holder is also known as protected holder or bona fide holder for value or holder in due course.