Difference between a Demand Draft and a Cheque
| Basis of Difference | Demand Draft |
|---|---|
| Purpose | To transfer money from one place to another safely |
| Issuance | Issued by the bank itself |
| Bank Charges | Applicable |
| Payable to | Always payable to a specific person |
Can DD be made with cash?
The Demand Draft can be made by paying the Bank in Cash as well, but for Demand Drafts exceeding Rs. 50,000 the payment should be by cheque only. However, in case you are required to make the payment in foreign currency, a draft can be prepared in foreign currency as well.
What do you need to know about a demand draft?
A demand draft is a method used by an individual for making a transfer payment from one bank account to another. Demand drafts do not require a signature to cash. A demand draft is a prepaid instrument so you cannot stop payment on it.
What is the difference between a demand draft and a cheque?
Demand Draft is a negotiable instrument, issued by the bank in favour of a certain person or entity, to transfer of money from one place to another. By the account holder to the bank. By the branch of a bank to another branch of the same bank. Payable either to order or to bearer. Always payable on demand to a specified party.
Who is the payee of a demand draft?
The bank issues the draft, making it the drawee. After the draft matures, the owner of the other company brings the demand draft to his bank and collects his payment, making him the payee. A demand draft is issued by a bank while a check is issued by an individual.
Can a demand draft be transferred to another person?
It cannot be transferred to another person in any situation. The bank issues the draft to a client (drawer) directing another bank or own branch to pay the specific amount to the payee. Demand drafts can be compared to cheques but these are hard to counterfeit and more secure.
