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The way to get Demand Draft cancelled, what occurs when demand draft expires. When a financial institution prepares a requirement draft, the amount of the draft is taken from the account of the customer requesting the draft and is transferred to an account at one other financial institution. Cheques aren’t most well-liked by them as it has a chance of being dishonoured in case of insufficient steadiness in the checking account as opposed to demand draft that may by no means be dishonoured.

But all are same by nature and issued to the party like a cash or you can say…. You would have seen that many organisations when receiving payments from the public don’t accept Cheque Payments and require that payments should be made through Bank Drafts. The reason for this is that there are chances that the Cheque may get dishonoured or may not clear due to any reason whatsoever, but that is not the case with DD. In case of a DD, the Payment is to be made by the Bank who has drawn the Demand Draft and therefore the chances of the cheque not clearing are Nil. Just upload your form 16, claim your deductions and get your acknowledgment number online.


When these cheques are not properly written, they may be rejected or dishonoured by the bank. Any kind of default or overwriting issue in the cheque can make it difficult to process the cheque. Note that even after the demand draft expires, the money will not be deposited in the drawer’s account.

Demand draft fraud: How to be alert?

This is as a result of the drawer has to pay earlier than issuing a requirement draft to the financial institution whereas cheque may be issued without making certain the enough funds in your checking account. Therefore, cheques can bounce however drafts guarantee a protected and on-time cost. The Demand Draft is a pre-paid Negotiable Instrument, wherein the drawee bank undertakes to make cost in full when the instrument is introduced by the payee for payment. The demand draft is made payable on a specified department of a bank at a specified centre. In many transactions cheque just isn’t often accepted because the drawer and payee are unknown and there might be credit score risk as cheque may bounce. So, in such circumstances Demand draft is accepted where the switch of cash is assured.

A demand draft can be considered safer than cheques as the bank issues a demand draft only if the person who asks for the demand draft or the drawer has a significant balance in his bank account. This is in contrast with cheques which are issues irrespective of the balance in one’s account. Demand draft printing renders corporations to make bulk disbursements through demand drafts. This facility includes printing and despatch of demand drafts / pay orders. Normally demand drafts are used to pay on demand certain amount to a specified beneficiary from one branch to another branch of same bank. However, since DDs are a kind of cheque, the basic principles of cheque clearing also apply to drafts.

Demand Draft | Bank Draft | Payment Method

The last decade has seen an electronic revolution in the banking sphere in India, but negotiable instruments are still used widely. Their existence depends on people overcoming the problems faced due to digital banking but someday in the future, they may become obsolete. The drawer is the individual requesting the demand draft; the financial institution paying the cash is the drawee; the party receiving the money is the payee. They had been initially designed to benefit reliable telemarketers who needed to withdraw funds from buyer checking accounts using their bank account numbers and financial institution routing numbers. A demand draft is a method utilized by an individual for making a transfer cost from one checking account to another. For customers who need to make payments in a international currency, they can visit a financial institution to get a Demand Draft made for the overseas foreign money.

Why is DD used?

Demand draft or DD is a method used by an individual or a bank to transfer money from one bank account to another. Demand drafts differ a lot from cheques, as they do not require the signature of the account holder to be cashed.

The financial institution then becomes the payer, on behalf of the one who requested a DD, for the payee. The name of the person or party who the demand draft is to be paid to is mentioned on the DD. This person or party who receives the demand draft is called payee.

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If the DD is not crossed, the payment would be made by the bank to the holder of the Instrument after his proper identification. And in case, it is a crossed demand draft, the payment would be made only to the Bank Account of the person. ClearTax offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. ClearTax serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.


Every cheque leaf has a 6-digit cheque number written at the bottom left-hand side of the cheque. In case you don’t have a cheque register book, make use of a spreadsheet to record the information. With reference to the office of the Attorney General of India, Which of the following statements is/are correct? In the performance of his official duties, the Attorney General has the right of audience in all courts in the territory of India. SSC JE ME Paper I 2022 Results & Cut-Off has been released.The SSC JE Paper II Exam will be held on 26th February 2023. SSC JE ME 2023 Notification will be released on 26th July 2023.The exam is scheduled to be held in October 2023.

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People often use demand drafts the place transactions with cheques are problematic or there are probabilities of it being bounced. Also generally known as DD, a demand draft is a mode used to transfer funds from one checking account to a different. When someone issues a fake demand draft to the payee and the payee submits that to the bank, it is a demand draft fraud. Note that presenting a fake demand draft to the bank can lead to legal problems with the bank, as it is allowed to file an FIR against the payee.

The money through this demand draft can only be transferred to the payee and no other person can receive this DD. The charges of making a demand draft are not fixed and vary from bank to bank. For a fixed and smaller amount of a DD, the bank might charge a fixed rate. Furthermore, the charges of making a DD might be lower for privileged banking customers. As per the DD, the cancellation charges might also vary from 100 INR to 300 INR. Has a predetermined pay time in the future and is not payable right away.

Why is DD called bankers cheque?

A banker's cheque is also known as DD (Demand Draft). A Demand Draft is a non-negotiable instrument issued by the bank on the behalf of its customer. The branch that issues the cheque is different from the one that pays it. A DD is valid for a period of three months.

Demand drafts are orders of payment by a bank to another bank, whereas cheques are orders of payment from an account holder to the bank. Demand drafts are only payable on demand and they can be only deposited in the bank, unlike cheques demand drafts cannot be paid to the bearer. Demand drafts are usually issued when a large amount of money is in question or within parties who are unknown to each other and thus lack trust. Also demand drafts are only issued by banks and you cannot issue them on an individual level.

Further, issuing a cheque is a simple process and can be done anywhere, anytime. A form has to be filled and submitted to the branch, which then takes a certain amount of time to process the request. While cheques can be issued as bearer, demand drafts cannot be done in that manner and have to be deposited in one’s bank account. A demand draft in India is valid for three months from the date of issue. The Demand draft will be invalid if it is not submitted within three months, but money will not be immediately refunded. The purchaser of the draft should then go to the bank branch that issued the draft and request for the draft to be revalidated.

If a difference between cheque and dd is lost and it’s not an account payee cheque, there are chances of it being misused if you fail to inform the bank in time. Also, if not kept properly, there are chances of cheque leaves getting misplaced or lost. So, even if it’s lost, it can be cancelled using the counter-file to prevent misuse. S are usually chosen by the government and educational establishments since they have a monetary value and they are the safest method to receive payments. Before releasing the draft, the drawer must pay the stipulated amount to the bank, which serves as an assurance for the pledged funds.

  • A written text that can be delivered is referred to as a Negotiable Instrument.
  • NEFT, RTGS, IMPS, UPI, Mobile Banking, Digital Wallets, and other non-paper payment methods include NEFT, RTGS, IMPS, UPI, Mobile Banking, and Digital Wallets.
  • In case you don’t have a cheque register book, make use of a spreadsheet to record the information.
  • A demand draft is a pre paid negotiable instrument, wherein the drawee bank undertakes to make payment in full when the instrument is presented by the payee for payment.

The expenses for overseas foreign money DDs are higher than these payable in the Indian forex. If the demand draft has expired and has not been encashed by the payee, the quantity is not routinely credited back into your account. You’ll have to put in writing an application to the issuing bank for revalidation of the DD.

Demand draft: How to fill?

Cheques and demand draft are more and more dropping their place as instruments which are used for funds as, most people are today making payments through the RTGS, NEFT,IMPS mechanism. Demand draft is valid only for a period of three months, submit which the instrument becomes ineffective and if the particular person requires to make the funds again, they should draw a brand new DD. In this payment mechanism, the payer bank guarantees to make the total payment when the demand draft is presented by the payee. It is price mentioning that the demand draft is payable only at a specified centre of a specified branch of the bank.


It is mostly used in international to help importers and exporters fulfil their transactions. A bill of exchange however is different from a contract but can be used by the parties involved to specify the terms and conditions of a transaction. Although bills of exchange are similar to the promissory note, many differences exist between them. Bill of exchange is also defined in Section 2 of the Indian Stamps Act, 1899 and the bill of exchange payable on demand has been explained in Section 2 of the Indian Stamps Act, 1899. The financial institution will re-validate the draft, which is again valid for three months, after which you’ll be able to cancel with the process mentioned above, or you can use the DD again to transfer funds. Demand drafts and different types of payment devices are slowly shedding their importance in the banking business.

What are 3 advantages of a cheque?

  • You can use checks to pay bills by mail.
  • They are convenient and easy to use.
  • You don't have to carry large amounts of money with you.
  • You can use checks to make purchases.
  • You don't have to pay to cash checks.
  • It is safer to use checks.

Cheque and Demand Drafts both are used for the purpose of payments. Since it is not always possible to give the money in cash to another person or party, they are popular for doing the payments. Since the banks are involved in between the payment process, the currency paid is considered to be authentic. This article is written by Ashutosh Singh, a student at Amity law school, Kolkata. The article explains the salient features of three negotiable instruments, promissory note, a bill of exchange and cheque, highlighting the differences between them.

Cheque payment not ideal, should you pick Demand Draft, NEFT or RTGS? Check out best method; all you need to know – The Financial Express

Cheque payment not ideal, should you pick Demand Draft, NEFT or RTGS? Check out best method; all you need to know.

Posted: Wed, 22 Nov 2017 08:00:00 GMT [source]

All efforts have been made to ensure the information provided here is accurate. Please verify with scheme information document before making any investment. By submitting this form I authorize to call/SMS/email me about its products and I accept the terms of Privacy Policy and Terms & Conditions. In certain circumstances, this pricing fluctuates among banks based on a user’s preference points. “Blank cheque” means a cheque in which the drawer puts his signature and leaves all other columns blank.