Difference Between Banker’s Cheque and Demand Draft with Similarities and Comparison Chart

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Both DD , CHEQ and Banker chq is valid for max 6 months only based on the RBI guidelines. A cross cheque consists of two parallel cuts over the top left to signify its value separately for the bearer. Many fraudsters, use a cheque to scam people or organizations. Appreciate your way to make us learn these basics technical terms about cheque and DD.

Unless the cheque is not presented before the bank, within a reasonable time, proceeds cannot be realized. Further, the availability of funds in the account is a precondition for payment of the cheque. If sufficient funds are not present in the account, the cheque will be dishonoured. Cheques and demand draft are increasingly losing their place as instruments that are used for payments. This is because, most individuals are today making payments through the RTGS and NEFT mechanism.

Therefore, such cheques are never dishonoured as the payment of such cheques is already deposited in the banks. On the other hand, demand draft is a financial instrument, used by people for the purpose of transferring money from one place to another. So, both the instruments, cheque and demand drafts have their own uses and limitations.

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The cheque is a negotiable financial instrument containing an order to the bank, to pay the specified sum, to the person whose name is mentioned in the instrument or to the bearer. On the other hand, a demand draft is a prepaid instrument issued by the bank in favour of a certain person or entity, to transfer money from one place to another. In a nutshell, we can conclude that the banker’s cheques and demand drafts facilitate high-value transactions to minimize the risk of defaults from buyers/ drawers ends.

Since it is not always possible to give the difference between cheque and dd in cash to another person or party, they are popular for doing the payments. Since the banks are involved in between the payment process, the currency paid is considered to be authentic. Bacs transfers are typically used by organisations to pay salaries, pensions, state benefits and tax credits but like cash and cheques, they can also be used by customers for one-off payments. Customers have full control over when and how much they pay through these methods. Both are non-negotiable instruments that cannot be transferred to any person/ entities. All bankers cheques are preprinted and non-negotiable.

Now, the payee has two options – first to present the cheque before the bank again within 3 months from the date stated on the cheque, or to legally prosecute the drawer of the cheque. In this writeup, you will get to know about the differences between cheque and demand draft. Crossed Cheque – The Crossed Cheque can only be redeemed by following few set of instructions like it cannot be redeemed at the cash counter.

It is suitable for the public like dealing with fewer relations with bank immediate action and the security measures to be performed. We basically cover every bank’s documents at most possible for us to share. Also, the payee has to bear some governmental identification to withdraw funds. Stale cheque, i.e. presentment of the cheque after the expiry of the validity period . Irregular signature of the issuer, i.e. signatures do not match.

I guess, they generated the cheque based on account name which was opened with name on my PAN card. Now, I am not able to deposit those cheques in any of my other bank accounts. (the reason is the beneficiary name is not matching.). I work from onsite and can’t go back to India at this moment. But I can send someone to branch with aadhar card and PAN card. As all you know the cheques are valid for 3months, any idea how to encash or transfer money to another account.

If the account is in a branch of same bank, (e.g. you gave a Citibank demand draft and the receiving person also has Citibank account) it gets cleared in that branch itself. So finally the Demand Draft get’s cleared in any branch of the issuing bank. The banker’s cheque or otherwise known as pay order is an instrument issued by the bank on the behalf of a customer, containing an order to pay a certain sum to a specified person, within the city. The validity period of the Banker’s cheque is 3 months; however, it can be re-validated subject to some legal formalities. In case of cheque, the payment can be made to order, i.e. the person whose name is mentioned on the cheque or to bearer, i.e. the person who presents the cheque to the bank. On the contrary, as the name suggests, a demand draft is payable on demand, to the person or entity whose name is specified on the face of it.

Order cheque-

Many businesses accept regular payments by cheques, cash or Bacs transfer. Increasingly, however, SMEs across the country are turning to Direct Debit because it is simpler and cheaper. I made a $150 DD from kuwait to pay my exam fees to IEI, Kolkata from Mashreq bank psc, New York, through an Exchange company. They ensured that it will be payable anywhere in India while issuing the DD. But in the IEI website it is mentioned as ‘payable at kolkata’.

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The banker’s cheque is pre-printed with the word “Not Negotiable” however, this is not so in the case of demand draft. Therefore, if the cheque is issued to the payee as a gift, or to lend money, he/she cannot sue the drawer, on those grounds. A cheque can be dishonoured due to different reasons, such as insufficiency of funds or other similar reasons. As against, demand draft cannot be dishonoured, as it is paid in advance.

Differences between a Cheque and a DD

It has a validity of 3 months from the issued date. Both are used for the payment for settling transactions. Got a clear idea of a cheque and a demand draft.

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A DD will bounce only when the drawee bank does not have enough funds to honour the DD. Bankers cheque can be cleared in any branch of the bank provided it comes under the local jurisdiction, but Demand Draft can be cleared at any branch of the same bank irrespective of the city. ‘ means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment. After the generation of an electronic image for transmission, the image substitutes the physical movement of the cheque in writing.

Cheque Vs DD: एक जैसे नहीं हैं बैंक चेक और डिमांड ड्राफ्ट, कन्फ्यूज हैं तो जान लें दोनों का अंतर

They are highly exposed to threat as anyone can claim to withdraw funds. In demand draft, drawer and drawee are basically two different branches of the same bank, however, the payee is the third party, to whom the payment is to be made. Having said that there is a minimum charge that is applicable on NEFT and RTGS transactions. The charges though are very nominal and compared to the convenience, these are much better way of remittance as compared to demand drafts and cheques.

The cheque is called as a negotiable instrument because it can be used in exchange for cash. Further, it can be negotiated by way of endorsement and its payment is made, on-demand. Further, when a cheque is payable to the bearer, it is negotiable through a mere hand delivery. For this purpose, various methods of payment are used, in which cheques and demand drafts are also included.

But finally the cheque wil have to come to the original branch for collection. Thanks for the information Nims.and I am not at all cleared for those answers pls help me to understand. Admiring the hard work you put into your website and in depth information you present. It’s great to come across a blog every once in a while that isn’t the same old rehashed information. I’ve bookmarked your site and I’m adding your RSS feeds to my Google account. This is a different type of cheque used to buy drafts or orders by deducting from balance from the owner’s account.

  • Is your payment collection process ready for economic uncertainty?
  • The validity of both the instruments is 3 months from the date of issue.
  • Further, it can be negotiated by way of endorsement and its payment is made, on-demand.
  • Customers have full control over when and how much they pay through these methods.
  • But, again the person has to visit the bank branch to apply for the demand draft.
  • The company has account in a bank at near by branch.

Watch on-demand to find out how you can protect your revenue by automating your payments. Drawer and Drawee are two different branches but of the same bank. The payee is the third party to whom the payment is to be made. Payment is made of the cheque issued after the presentation of a cheque for encashment. It can be revalidated if expired and duplicate banker cheque can be issued if lost for nominal fees.

But here is no citi bank branch, can i exchange it any other bank. If I draw a dd from bank of Baroda can it be encashed by the recieving party in icici bank.I mean can dd be used across banks. In a cheque, the drawer and the drawee are different persons. But in a draft, both the drawer and the drawee are the same bank. I have a banker’s cheque where my surname is typed first and date is not mention there is there any problem. I have a banker’s cheque where my surname is typed first and date is not mention there is there any problem in chasing it.

Difference between Cheque and Demand Draft

Or money is taken from your account for this reason. So you may consider both as something a pre-paid stuff. Unlike with ordinary cheques, here the amount is assured by bank. There is no fear of something being dis-honoured.

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It is generally preferred when the payee wants 100% payment guarantee from the buyers/ clients because a bank itself guarantees the settlement of payment in future. This is because a banker cheque can be obtained only against advance payment. V) Two parties involved in this method, drawer and the payee. Vi) Only account holders of the bank can avail cheque book facility. Vi) Account-holders, along with non-account holders, can avail demand draft facility.

This requires a fundamental understanding of the pain points our customers are experiencing and a thorough comprehension of the ways those customers consume and engage with content. He has also led on customer lifecycle management programs and account-based marketing strategies for BlackRock, EY, Grant Thornton and UBS. Drawer and Payee may be two different persons – if the payment is to be made to any third party. Drawer and the Payee may be the same person if the cheque is drawn on “Self”.

Normally, we see cheques get bounced or dishonoured due to insufficiency of funds in the issuer’s account or for some account related issues. But a Banker’s Cheque will NEVER get bounced because it is taken against money already deposited by the customer who is requesting for demand draft. 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.

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If its used whitin a particular city its refers as banker’s cheque. While taking DD you will have to fill “Payable at”. If you “payable at” place is in the same city where the bank is then they will issue Bankers cheque or else they will issue DD.

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