In this blog, we will discuss the most used term “Demand Draft”. Many of us heard this word many times but don’t know about it or many people have less knowledge about it. Let’s get started with the detail and other important factors related to this term.
Draft meaning
When it comes to the meaning of draft then in simple terms you can define it as a document stating some legal or statement that needs to be carried out.
What is the demand draft?
The demand draft is also known as DD. Most of us must have heard about DD once in our lifetime for sure. Also, we have a few ideas about it like it’s something connected with banks or banking. A demand draft is an instrument that is often issued by the bank. The main purpose of its usage is that it guarantees a defined amount of payment stating the name of the payer or payee. Under any circumstances or situation, it cannot be transferred to anyone. It is often given by one particular bank to the respective client or also called the drawer stating clearly to pay the desired amount to another bank or even it is very next branch.
Now, the query arises that when it is issued? The answer to this is that a demand draft is mostly issued in that case where the organizations or the parties are not at all familiar and remains unknown. In this scenario, both also lack trust and it’s a situation where chances of fraud are more. These drafts are also payable on individuals or organizational demand. Talking very honestly the demand drafts are more secure and reliable when it comes to trust issues and frauds. They are even more reliable than cheques as the counterfeit part is very hard in that of demand draft. The reason behind this is that the drawer needs pay before making a demand draft.
This amount needs to be paid to the bank. The difference here lies in that the process in cheque doesn’t ask for ensuring or checking the amount in the bank of the individual whereas the demand draft does. Thus chances to bounce is very less or nil. Now that we have got to know about the demand draft and its basics and functioning let’s move on to its and pros information charges.
What are the Charges of demand draft?
The demand draft charges can vary from bank to bank. Yes, indeed, it is not the same in the case of every bank. Here we have tried to cover some of them. Let’s see them one by one:
- State bank of india-The draft charges vary upto Rs 5000- Rs25,Rs 5000 to Rs 10000-Rs 50,Rs 10000 to Rs 1 lakh-Rs 5 per Rs 1000 etc.
- HDFC(net banking)-The demand draft charges here for HDFC through net banking is up to Rs 1 lakh-Rs30.
- ICICI bank- Charges here for ICICI is Rs 25000 per day-nil, above 25000-Rs 3 per Rs 1000.
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Types of demand draft
Officially there are two major types of demand drafts. Let’s See them in brief:
A. Sight demand draft-They are those DD’s which require proper verification of certain important documents. If any of the required documents are misses then the payee won’t be able to get the desired money.
B. Time demand draft-Such drafts are payable for the desired time period. After the timespan ends the amount cannot be drawn from the bank at any cost.
How to make a demand draft?
It’s very easy and convenient for one to make it. All an individual needs to do is just take a form for demand draft from the bank and then fill it. You can also carry this step online at your convenience. Fill in all the details that are required and also the mode of payment, details regarding a cheque, etc. You also need to give your PAN card details. Then you need to pay the charges for the demand draft.
Pros of DD
- The transferred amount is totally guaranteed.
- DD is more convenient and doesn’t require much of the payee information.
- DD is very secure more than that of a cheque.
- No good connection or any external stuff is required as that in the case of online transactions.
- Not at all chances of hacking or fraud.
Conclusion
Especially if the users are unknown it’s among the best way possible. This was all that an individual must know about the demand draft. Hope this article will be able to answer all your queries.
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