Demand Draft
A Demand Draft (DD) is a method used by individuals or banks to transfer funds between bank accounts. Unlike cheques, demand drafts do not require the account holder’s signature for encashment.
Demand Drafts are considered a safe method of payment because they are prepaid instruments. The funds required to cover the amount of the DD are collected upfront from the customer. Therefore, the recipient can be assured of receiving the specified amount of money, provided the DD is genuine and not forged.
It’s important to note that with the advancements in digital banking, alternative electronic payment methods such as online fund transfers, mobile payments, and digital wallets have become more prevalent. These methods offer faster and more convenient ways of transferring money compared to traditional Demand Drafts.
Features
- A demand draft is a means of initiating a bank transfer without the need for a signature, unlike a check.
- Demand drafts are prepaid instruments, meaning that once issued, they cannot be stopped or cancelled in cases of fraud or if sent to the wrong recipient.
- While demand drafts may be less flexible than other payment methods, they provide enhanced security compared to electronic or online payment systems.
- In the event of a lost or stolen demand draft, it is important to contact your bank for assistance.
- Demand drafts are issued by the bank, using the funds from the customer’s account upon request.
- The recipient of the demand draft, also known as the payee, is specified on the draft itself.
- Demand drafts offer a higher level of safety and help minimize the risk of fraud because banks issue them only when the account holder has sufficient funds.
