The proceeds of sale of State institution bonds shall be received by the State Treasurer and placed in a fund to the credit of the State Board subject to withdrawal on their order, except that all accrued interest received shall be used by him to discharge the first installment of interest coming due, and any premium shall be used to discharge the first installment of principal coming due on such bonds. On the occasion that he receives the proceeds of State institution bonds from the purchaser, the State Treasurer shall segregate the proceeds for the account of the State institution or institutions for which the bonds shall be issued. The purchasers of the State institution bonds shall in no wise be liable for the application of the proceeds of the bonds to the purposes for which they are intended.