What is the difference between Cheque and DD Explained

difference between cheque and dd
difference between cheque and dd

In general, the validity of the cheque is three months, and you must deposit it within three months after its issuance. You should be aware of the difference between cheque and demand draft before going to prefer anyone thing. If you don’t want to face the issues or delayed payment then a demand draft is the right pick for you as it is the major difference between cheque and demand draft. On the other hand, demand draft is a financial instrument, used by people for the purpose of transferring money from one place to another. A cheque and a demand draft, both are the instruments offered by the banks in India to facilitate payments or transfer of funds without cash or internet.

And in case, it is a crossed demand draft, the payment would be made only to the Bank Account of the person. In order to obtain the payment, the beneficiary either has to deposit the same in his Bank Account or get the same collected through the Branch who has made the DD. To get the advantage of the fast payment you should learn about the difference between cheque and demand draft.

difference between cheque and dd

Demand draft is a type of negotiable financial instrument which is issued by the bank in favour of the client to transfer money to different cities. A demand draft is a method used by an individual to make a transfer payment from one bank account to another. Demand drafts differ from regular normal checks in that they do not require signatures to be cashed. A demand draft is also a payment instrument offered by the banks in India. However, unlike a cheque, a demand draft can only be issued by the bank and not the individual.

Content of demand draft along with the difference between cheque and demand draft:

I’ve bookmarked your site and I’m adding your RSS feeds to my Google account. Big transaction payments such as EMI’s are usually paid. Time Demand Draft – These type of DDs are payable only after a specific period as determined by drawer. Drawee – is the person who is directed to make the payment against cheque.

difference between cheque and dd

Demand draft charges are usually different for each bank and depend on the amount being transacted. It may be Rs 25 or Rs 100, depending on the bank and amount. There are no charges for sending DD within the same bank. Iv) The draft can be issued if there is a lack of trust between parties.

Contents of the cheque along with the difference between cheque and demand draft:

So DD is always considered to be the safest mode of fund transfer. Demand Draft is a negotiable instrument issued by the bank that directs other bank or its branch to pay the payee, a specific amount stated therein the draft. There are two parties involved in transaction through DD – Drawer and Payee . The facility of Banker’s Cheque and Demand Draft can be availed by any person, irrespective of whether he is the customer of the bank or not. The money can be easily transferred with security through these instruments because of the pre-payment facility, as there will be no chance of getting the payment dishonored or bounced.

  • All bankers cheques are preprinted and non-negotiable.
  • 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.
  • If the DD is not crossed, the payment would be made by the bank to the holder of the Instrument after his proper identification.
  • So finally the Demand Draft get’s cleared in any branch of the issuing bank.

I have to pay my college semester fee.I have an educational loan in sbi.College has asked to pay through dd but the bank has issued a bankers cheque.Will it be accepted? In case of business transactions, Cheque is not usually accepted as the drawer and payee are unknown. In such cases, DD is accepted where the fund transfer is guarantee by bank. Demand draft is best option over cheque to receive the payment due to no credit risk. Crossed Cheque – Also known as account payee cheque in which two transverse parallel lines are drawn on the cheque. Such cheque can’t be encashed, they are payable only to the payee’s account.

Difference between Cheque and Demand Draft ?

It means an issuing bank and clearance bank will be the same. Demand draft is a type of financial instrument which is used to transfer money from one person to another person in the different city. This helps in preventing wrongful payment to any person and ensures that the payment is made only to the person in whose favor the DD has been drawn and not to any person.

When you give the DD to someone, he/she tries to get it encashed or deposited to 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.

Both are issued by the banks on behalf of their customers or non-customers. 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. Dear Ms Maha, BC and DD have absolutely make no difference for us. Specifically in your case, if the bank you took DD and college’s bank account are of the same bank, the Bank will issue a BC even if you asked for a DD. However, if the college’s account is in some other bank then the bank will issue DD. If its used whitin a particular city its refers as banker’s cheque.

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. In case of a stale cheque, if the cheque is deposited after the validity difference between cheque and dd time period. The cheque involves three people in the entire procedure, but the demand draught involves just two. Demand draught, according to studies, is incredibly handy for consumers since it takes very little time.

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. 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. It is issued by the bank in favour of the recipient to transfer money from one bank branch to another, located outside the city.

Can DD be Cancelled?

This document is a horizontal sheet of paper which carries various details about the bank and branch as well as the account number of the issuer. Issuer has to mention the name to whom the cheque is being issued in favour of along with the amount to be paid in words and figures, both. The banker’s cheque is payable at any branch of the same bank within the city, on the other hand, demand drafts are payable at any branch of any city.

Cheque and DDs are traditional method of payments, losing their place in digital era. Now, there are lots of fancy options like NEFT, IMPS, RTGS, UPI etc., available for fund transfer. Bank charges commission or fee for fund transfer through NEFT and RTGS. But they are very nominal as compared to convenience and ease. Self Cheque – The Cheque in which ‘self’ is written at the name of payee is known as Self Cheque. A person can withdraw money from his own account using self cheque.

A cheque is an order of payment from an account holder to the bank. You can pay the demand draft at any branch of any bank. But the point you have to keep in mind is that it requires a fee. Yes, He can be issued a bankers cheque instead of a DD. It can be revalidated if expired and duplicate banker cheque can be issued if lost for nominal fees.

My question is specific to Banker cheque and wrong(?) beneficiary name. I got two bankers cheques from SBI where my surname is not mentioned. 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.

A demand draft is cleared in the different branch of the same bank in any city. It means the issuing branch and paying branch can be different in the different city. A banker’s cheque is a type of non- negotiable instrument. A banker’s cheque is a prepaid type of non-negotiable instrument it means there is no possibility at all for the dishonour of it. A banker’s cheque is issued by the bank itself by debiting an account of the payer at the same time. If the DD is not crossed, the payment would be made by the bank to the holder of the Instrument after his proper identification.

Also, a demand draft is issued after the payment is made to the bank. This way, chances of demand draft getting dishonoured or bounced are zeroed down completely. Banks are playing the most significant role in today’s modern world from money transactions to transfer of money to different parts of the world.

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