General

Safely Send Money: A Beginner's Guide to Demand Draft (DD)


10, January 2026

DD, short for "Demand Draft," are like special bank checks used to move money between different bank accounts. You can use them to pay bills, invest money, or send cash to someone.

Banks or other financial companies make DDs when you ask for them, and they're for a specific amount of money. It's a safe and easy way to send money without using cash or online transfers.

Significance of Demand Drafts in Banking

Demand drafts, also called bank drafts or cashier's checks, started because banks needed a safe way to move money.

They began with written orders telling one bank to pay money to someone else. Demand drafts became popular for big payments or when extra security was needed, letting people and businesses pay without carrying lots of cash or waiting for checks to clear.

Now, demand drafts are important in banking, making it easy and safe to move money within a country or internationally. As technology gets better, issuing and using demand drafts becomes quicker and more secure.

Advantages of Demand Draft

Demand drafts, also called banker's drafts or just drafts, have some good sides that make them a top pick for paying in certain situations:

  • Safe and Secure:

Demand drafts are like prepaid checks, so they're super safe. When you make one, the money is taken from your account right away and kept safe by the bank until it's used. This makes it hard for anyone to trick or run out of money.

  • Guaranteed Payment:

Demand drafts always assure payment if there's enough money in your account. Unlike regular checks that might not work, demand drafts are reliable. This is really handy when you need to be sure you'll get paid on time.

  • Accepted Everywhere:

People everywhere are okay with demand drafts. They're used a lot for different things, like buying a house or doing business. So, no worries about where you can use them.

  • Easy Peasy:

Sending money with demand drafts is easy. You can do it online or just go to the bank. The person getting paid can cash it whenever they want.

  • Easy to Follow:

Demand drafts keep things organized. Banks keep detailed records, so it's easy to see who paid, who got paid, and how much. This helps with keeping track of your money.

  • Works Worldwide:

Demand drafts are good for sending money overseas, especially where electronic payments aren't common. So, you don't need to stress about different money systems.

  • Looks Good for Credit:

Paying with a demand draft shows you're good with money since you paid upfront. That can make people trust you more in business.

  • Legal Backup:

If there's ever a problem with payment, demand drafts offer legal help. They're like a contract, so if someone doesn't pay, you can take them to court to sort it out.

Here's a breakdown of how DDs simplify transactions in different scenarios:

Buying a car from a private seller: A demand draft ensures that the seller gets paid right away when handing over the car title, avoiding the risk of getting a bad check.

Making a down payment on a house: Using a demand draft guarantees that the seller or their realtor receives the funds securely for the down payment.

International business transactions: Demand drafts are commonly used to pay foreign suppliers, providing security and quicker access to funds compared to international wire transfers.

Demand Draft Validity

Demand drafts usually have a time limit set by the bank. They're usually good for 3 to 6 months after they're made.

If you don't cash them in before that time's up, they might not work anymore, and you might need to get them checked again or get your money back.

It's important to check the time limit written on the demand draft or ask the bank to make sure you use it before it expires.

Demand Draft vs Cheque

Demand Draft:

A demand draft is like a prepaid payment slip issued by a bank for you. It ensures that when someone gets the slip and cashes it, the money is already taken from your account. For instance, if you buy a bike, you might give the seller a demand draft. They take it to their bank, and once checked, they get paid right away.

Check (Cheque):

A check is a paper you write to your bank, telling them to pay a certain amount to someone else. It's like giving a assurance to pay. For example, if you pay your rent with a check, your landlord takes it to their bank, and after a few days, the money comes out of your account.

Also Read: Types of Cheques in Bank

GRC Shreekrish - Homes247.in

Demand Draft Charges

In India, the cost of getting a demand draft depends on the bank and how much money you need.

Normally, banks ask for a fixed fee, which could be between ₹20 to ₹50 for smaller drafts. For larger amounts, there might be extra charges.

Also, if you want the draft quickly or delivered, there could be more fees. It's best to ask your bank about the exact charges for demand drafts.

Types of Demand Draft

There are two main types of Demand Drafts (DD):

Sight Demand Draft: This type of DD is paid immediately when presented to the bank. It's like cash - once the bank checks it, the payee gets the money. Sight drafts are often used in international transactions when the seller wants to make sure they get paid before handing over goods.

Time Demand Draft: This DD has a set payment date in the future. The bank holds onto the funds until that date. Time drafts are less common but can be handy when both parties need time to meet their obligations before payment. For instance, a landlord might use a time draft for returning a security deposit to a tenant after they move out, given no damages.

Demand Draft Processing Time

Picture this: getting a demand draft is like cooking your favorite meal. There are two speeds to choose from: standard and expedited, just like regular and fast cooking.

Standard processing is like letting your meal simmer on the stove for a while, usually taking one to three business days. But hey, if you're in a hurry, you can crank up the heat and get it done on the same day! Of course, you might have to pay a little extra for this speedy service.

Now, imagine your meal ingredients. If they're all from the same store, it's quick and easy to whip up. That's like a local demand draft, where everything happens within the same bank's network. But if you're sourcing ingredients from different places, it might take a bit longer - just like an international demand draft involving other banks.

So, to make sure your demand draft is ready when you need it, it's best to chat with your bank. They'll give you the scoop on exactly how long it'll take for your transaction.

Demand Draft Security Measures

Banks have special rules and tools to keep demand drafts safe from fraud. They carefully check who requests a demand draft, add special features to drafts to prove they're real, and double-check everything when someone cashes them.

They also use secret codes to protect information when sending it. Banks train their staff to spot fraud and teach customers how to stay safe.

With all these precautions, demand drafts stay secure for both the person paying and the one getting paid.

Demand Draft Refunds and Cancellations

Demand Drafts (DDs) are like special checks issued by banks or financial institutions to safely send money. If something goes wrong, like if the DD gets lost or stolen, the bank can give the money back to the person who bought the DD.

They just need to ask for a refund by writing a letter to the bank and giving details like the DD number and amount. The bank checks everything and then either puts the money back in the person's account or gives them a new DD.

If someone changes their mind and doesn't want to use the DD anymore, they can cancel it. They have to write a letter to the bank asking them to cancel it. Sometimes the bank might charge a small fee for canceling, and they'll need to give back the original DD.

After the bank checks everything and confirms the cancellation, they make sure the DD can't be used anymore. The money that was taken from the person's account to make the DD gets put back.

It's important to remember that each bank might have slightly different rules for refunds and cancellations, so it's best to ask the bank for their specific instructions.

How to deposit demand draft in bank?

Depositing a demand draft (DD) in a bank is easy. Here's how you do it:

  1. Visit the Bank: Go to the bank where you have an account or where you want to deposit the DD.
  2. Fill Out a Deposit Slip: If you don't have a deposit slip, ask the bank staff for one. Write your account number, name, and the amount you're depositing. Say that you're depositing a demand draft.
  3. Endorse the Demand Draft: Sign your name on the back of the DD, just like it appears on the front.
  4. Give it to the Bank Staff: Hand over the filled deposit slip and the endorsed DD to the bank teller or staff member. They'll take care of the rest.
  5. Wait for Verification and Crediting: The bank will check the DD and put the money into your account. It might take a bit of time for the funds to show up in your account, depending on the bank's rules.
  6. Get a Receipt: Once you're done, make sure to get a receipt. This paper shows that you deposited the money and includes details like the amount and a reference number.

Remember, different banks might have different rules, so if you're unsure about anything, just ask the bank staff.

Demand Draft vs Pay Order

Here's a simplified table summarizing the key differences between a Demand Draft (DD) and a Pay Order:

Aspect

Demand Draft (DD)

Pay Order

Purpose

Used for sending money between different bank accounts, usually for big payments or to distant places.

Used for local payments within the same city, often for smaller amounts like bills or fees.

Issuance

Issued by one bank to another, assuring payment when presented.

Issued by a bank, guaranteeing payment to a specific person or entity.

Payment Method

Paid for in advance by the buyer, with the amount taken from their account when issued.

Paid upfront by the buyer, with the amount immediately taken from their account.

Recipient

Can be given to anyone, even if they don't have an account with the bank issuing the DD.

Usually made out to a specific person or business for payment.

Validity

Usually valid for a set time, but can often be extended if needed.

Generally valid for a shorter time, typically a few months.

Encashment

Can be cashed at any branch of the issuing bank or through the banking system.

Usually it needs to be cashed at the issuing bank, sometimes only at certain branches.

This table shows the main ways Demand Drafts and Pay Orders are different, like why they're used, how they're made, paid, who can use them, how long they're good for, and how they're cashed.

So nowadays, lots of folks and companies still rely on demand drafts. They're a safe and dependable way to send money securely.

Trending Blogs

Most Frequently Asked Questions?

How does demand draft work?

A demand draft is similar to purchasing a check from your bank for a specific amount. Once issued, you can give it to the recipient, who can then either cash it at their bank or deposit it into their account.

What is the typical processing time for a demand draft?

DD to get processed depends on the bank and the situation. Usually, it takes 1 to 3 business days for the bank to process the demand draft and take the money from the payer's account.

How can I check the progress of a demand draft I've sent?

You can call your bank and give them the draft number and date to check if it's been cashed or deposited. Some banks also let you track it online through your account.

Other General Blogs

21/1, Cunningham Rd, Shivaji Nagar,
Bengaluru, Karnataka 560001

+91 9164247247 (9:30 AM - 7:30 PM)
e-mail : enquiry@homes247.in

Stay Connected

Copyright © 2018 VSNAP Technology Solutions Pvt Ltd | All Rights Reserved.

Hi, I’m Homie 👋
Click to Post Your Property easily with AI