What is a Demand Draft?
A demand draft is a tool to transfer money between banks or persons. It's issued by a bank, instructs another bank to pay a specific sum to a recipient, and doesn't require a signature to cash. They're more secure than cheques because payment is guaranteed, as the issuer must first pay the bank. Drafts are refundable; the recipient must personally return it to the bank.
Kinds of Demand Drafts
There are two types of demand drafts:
Sight Demand Draft: This type is payable immediately after verifying specific documents. If the necessary documents aren't presented, the recipient won't receive payment.
Time Demand Draft: This draft can only be cashed after a certain time period.
How to Issue a Demand Draft
To issue a demand draft, you fill out a form either online or at a bank. You'll need to provide details like your payment method, the recipient's name, location for cashing the draft, your bank account number, and your signature. If you pay by cheque and the amount is over Rs. 50,000, you'll also need to provide PAN card information. Fees apply.
How to Cancel a Demand Draft
To cancel a demand draft, you must visit the bank; there's no online option. If you paid by cash, you'll need to present the original draft and receipt. If you paid by cheque, you’ll need the original draft and a completed cancellation form. Additional fees apply.
If you lose the DD or it doesn't arrive by mail, you'll need to validate that it was issued. This could be difficult but possible with the bank's cooperation.