DEMAND DRAFT

What is Demand Draft?   

Cheques and demand draft are increasingly losing their place as instruments that are used for payments as, most individuals are today making payments through the RTGS, NEFT,IMPS mechanism. But still today many applications for jobs, examinations, admissions, services, high amount purchases, etc. require  demand drafts rather than cheques. As Cheques can be dishonoured due to insufficient balance, but Demand Draft cannot be dishonoured. This article looks as steps to make a Demand Draft offline by filling form and online, What is Demand Draft,shows sample image of Demand Draft, What is Banker’s cheque. how to get Demand Draft cancelled, what happens when demand draft expires.  How does Demand Draft differ from cheque,  from Banker’s cheque.

What is Demand Draft?

The 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 demand draft is made payable on a specified branch of a bank at a specified centre. In many transactions cheque is not usually accepted as the drawer and payee are unknown and there will be credit risk as cheque may bounce. So, in such cases Demand draft is accepted where the transfer of money is guaranteed. Demand draft is valid for period of 3 months.

• A Demand Draft is payable on demand
• A Demand Draft can NOT be paid to a bearer.  In order to obtain payment, the beneficiary has to either present the instrument directly to the branch concerned or have it collected by his / her bank through the clearing mechanism.
• Demand draft is discussed in section 85(A) of the NI Act.Negotiable Instruments Act 1881

Sample Demand Draft

Sample demand draft is shown in image below. The various fields in DD are explained below. Sample demand draft is one sent Vizag engineer sends Kejriwal Rs 364 to save CM from embarrassment