demand draft fraud

Cheque has been defined in Negotiable Instruments Act 1881 section 6. A cheque is a bill of exchange drawn on a specified bank and not expressed to be payable otherwise than on demand. In their bank account every month and earn a rate of interest on the same.

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You must also include the sum of money, the denomination, the purpose for payment, and directions on whether the funds should be sent to you or straight to the recipient. Furthermore, before the issue of DD, you have to pay a charge to the bank. A demand draft is also a payment instrument offered by the banks in India. However, unlike a cheque, a demand draft can only be issued by the bank and not the individual. Also, a demand draft is issued after the payment is made to the bank. This way, chances of demand draft getting dishonoured or bounced are zeroed down completely.


Usually, a cheque is not accepted in plenty of transactions as a result of the payee and drawee are unknown. Paper money, in the modern sense, originated in the late 18th century and the note was issued by private banks as well as semi-government banks. Other payment instruments in the Indian money market were introduced by the private banks and the Presidency Banks. Cheques were introduced for the first time in India by the Bank of Hindoostan, in 1770.

Demand Draft Explained

The timeline of the demand draft can be extended for another three months by the drawer, who has to visit the bank to revalidate the demand draft. Remember that no one like the payee or anyone else other than the drawer can revalidate the demand draft. Also, the demand draft cannot be revalidated again if it expires the second time. People can use the facility of demand draft, irrespective of whether they have a bank account or not.

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.

This is one of the safest and the surest means of money switch between accounts as this can be a pay as you go negotiable instrument. Demand Draft or DD for short is a Negotiable Instrument used by an individual or an establishment to withdraw money from the financial institution. The drawee financial institution undertakes to pay the amount noted within the demand draft, to the drawer, as and when the instrument is presented to the drawee bank. Demand Drafts are made offline and are firstly drawn by the one that has to make the payment upon his or her personal financial institution.

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Through this facility the turn around time for delivery as well as the costs involved are reduced. A banker’s cheque is a payment method that is identical to a demand draft. A Banker’s Cheque is used to move money within the local area, while a Demand Draft is used to transfer money between two locations.

What is difference between DD and bankers cheque?

The most basic difference is that a banker's cheque originates from the bank and is issued by the bank on behalf of the customer. Whereas, the demand draft is issued by the customer itself.’s Cheque is issued for transfer of cash inside the local boundaries, whereas the Demand Draft is issued for transferring money of the individual residing in two completely different locations. Bankers cheque can be cleared in any branch of the financial institution offered it comes under the local jurisdiction, but Demand Draft can be cleared at any department of the same bank no matter town. 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.

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However, in case the Instrument isn’t a Crossed Demand Draft, it may be encashed with out depositing in the Bank Account, by encashing it over the counter from the Bank Branch. A bank draft and a cash order are each prepaid, with a specified and printed quantity. Each is considered a secure methodology of payment from a third-party institution.

It is an instrument given in writing with an unrestricted guarantee to pay a certain amount of money to a certain individual or to the bearer of the instrument and signed by the maker of it. While demand draft and cheque are both financial instruments given by banks, there is a stark difference between them. Note that banks also charge convenience charges for issuing demand drafts. The person/institution that receives the demand draft is called the payee and his/its name is mentioned on the demand draft. Note that the money on the demand draft will only go to the payee and no one else can encash it. Facilities are available to customer in this accounts without limitation on transactions like Cash deposit/withdrawal, cheque book, fund transfer, online banking etc.

Only the person, who has filled the application form for the original DD, can cancel it. The process to execute a DD is fairly simple and begins with the drawee/applicant filling the form and making the necessary payment in cash or from his/her bank account to the issuing bank. Like in most countries, banks in India also are required to develop their own individual policy / procedures relating to collection of cheques. The customer is entitled to receive due disclosures from the bank on the bank’s obligations and the customers’ rights. If there is any delay in collection beyond this period, customer is entitled to receive compensation at the rate specified in the CCP of the concerned bank. In case the rate is not specified in the CCP, interest rate on Fixed Deposits for the corresponding maturity to be paid.


It is a non-difference between cheque and dd instrument, an order to pay in the same city. In such a case, Demand Draft is accepted as the switch of cash is guaranteed here. A bank draft is a cost on behalf of a payer that is guaranteed by the issuing financial institution. Typically, banks will evaluation the financial institution draft requester’s account to see if adequate funds are available for the verify to clear.

For clarifications or interpretations, if any, one may be guided by the relevant circulars and notifications issued from time to time by the Bank. The scene you just saw shows how Frank Abagnale is taking out different amounts of Cashier’s cheques from his blazer and going outside to encash them. At this time Cheryl Ann interrupts him and asks him to endorse the cashier’s cheque to her. If a customer is apprehensive in regards to the security of his cash when he palms over the DD, he can select to go for a crossed Demand Draft.

Transfer of funds between bank accounts could be accomplished by way of a number of negotiable devices such as cheques, demand drafts , and cash orders. A demand draft of worth Rs 20,000 or more may be issued solely with A/c payee crossing. A demand draft is a negotiable instrument provided by a financial institution and is non-transferable. It is issued by a bank and is drawn by a “Drawer” who makes the payment. The drawer instructs the bank to make a cost to a particular particular person or an organisation known as “Payee” when it is introduced. These funds allow companies and service suppliers to transfer funds directly out of a customer’s checking account.

What is the difference between cheque and direct deposit?

Direct deposit is considered an electronic funds transfer (EFT) that deposits an employee's wages directly into their bank account. Employers distribute paper checks to their employees. You can either hand write checks or print them on check stock paper.

The which means of negotiable instrument is that it ensures a certain quantity of fee mentioning the name of the payee. These actions may be performed by ATM, internet banking, cheques and demand drafts and so on. Also generally known as DD, a demand draft is a mode used to transfer funds from one bank account to a different. With the introduction of cheques and on-line payments, DD is losing its reputation, however, it used to be one of the most in style payment modes a few many years ago.

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PAN card details – If the sum exceeds Rs 50,000 and you pay by cheque, you must submit your PAN card details. Check all the details, including amount, payable, etc., before you leave the bank. Fiercely independent and pro-consumer information on personal finance. There have been cases in the past when unscrupulous persons have managed to get bogus DDs with the connivance of Bank staff, and this has made this instrument as reliable as a cheque. Hence, seems it is better to use new-age facilities like NEFT/RTGS which are faster and more reliable. The original DD can therefore be presented for clearing and the situation explained by you can arise.


If you write a personal cheque to the University, there is a chance that the cheque would bounce as there might be an insufficient balance in your account. Hence a demand draft and pay order/ banker’s cheque works best for them. In India, a cashier’s cheque is called a Banker’s cheque or a pay order. As the name suggests banker’s cheque means a cheque issued by the bank itself.

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