Table of Contents
What is a demand draft used for?
A demand draft is a way to initiate a bank transfer that does not require a signature, as is the case with a check. A demand draft is a prepaid instrument; therefore, you cannot stop payment on it in the case of fraud or mis-intended recipient.
What is demand draft slip?
A demand draft is a negotiable instrument similar to a bill of exchange. A bank issues a demand draft to a client (drawer), directing another bank (drawee) or one of its own branches to pay a certain sum to the specified party (payee). A demand draft can also be compared to a cheque.
Why DD is used instead of cheque?
A demand draft cannot be dishonoured as the money is already paid to the bank, while in the case of a cheque, it can bounce due to instructions to stop payment by the drawer or due to insufficient funds in the account. While the bank issues a demand draft, a cheque is issued by the customer of the bank.
What is demand draft and its features?
Features of demand draft: It is an unconditional order for payment. It bears no stamp. The draft can be negotiated by endorsement and delivery. The purchaser of the DD need not be a customer of a bank. DD is drawn by a banker on its branch or upon another bank.
Can DD be bounced?
A demand draft is a negotiable instrument where the amount is paid before the DD is issued by the bank, hence, the DD is secure and cannot bounce as a cheque could.
Is DD safe?
Can we deposit DD online?
The form for demand drafts can be collected from the bank or can be filled online. You need to input some important details such as your mode of paying for the draft (cheque or cash), the name of the beneficiary, the place of encashing the draft, cheque number, your bank account number, signature, etc.
What does it mean to use demand draft?
Also known as DD, a demand draft is a mode used to transfer funds from one bank account to another. With the introduction of cheques and online payments, DD is losing its popularity, however, it used to be one of the most popular payment modes a few decades ago.
Do you have to be account holder to use demand draft?
Further, it is not necessary that the person who applied for demand draft, should be an account holder of the bank, rather any person can fill the DD form, and pay the concerned charges either through cash or cheque, to get it. DD’s are generally used when one has to make payment in another city and it can be cleared at any branch of the same bank.
Can a bank issue a duplicate demand draft?
Banks also possess the right to issue a duplicate demand draft in the case of a missing or lost DD. Bank will charge a small fee and cancel the old draft and issue a new one. A demand draft worth Rs. 5,000 or less can be issued by the bank on the basis of adequate indemnity without obtaining NPA (Non-Payment Advice). Q.
Can a demand draft be stopped by the drawer?
Payment of a demand draft may not be stopped by the drawer as it may with a check. Because a demand draft is a prepaid instrument, payment cannot be stopped, whereas payment of a check may be denied for insufficient funds.