Bank Cheque Vs Demand Draft: Bank Check and Demand Draft (DD) are very popular for cashless transactions. Although checks are used on a large scale by most of the people, but only DD is used for certain purposes. Both the mediums for transactions may seem similar in appearance, but there is a lot of difference in the transaction through both. Apart from this, some people prefer to transact through DD due to security related concerns. Given below are the basic differences between bank checks and demand drafts, so that you can understand how the transaction is safe and under what circumstances.
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Bank Cheque Vs Demand Draft
- Bank account not required for DD: Both check and DD are used to send money to a bank account. However, for payment of money through cheque it is necessary to have a bank account whereas for draft it is not necessary for the customer to have a bank account. You can get DD made by going to any bank, whether you have an account with that bank or not. If you do not have an account with the bank, then you can make a draft by giving cash and if you have an account, you can also make a DD with the money deposited in the account.
- DD only account payee: The person cashing it through check can also get cash from the bank or money can be transferred to his account. On the contrary, if any payment has been made through draft, then its money will be deposited in the account only. This means that the person whose account or company has got the DD made in his account, the money will be deposited in his account and even if he wants, he cannot get the cash in return for the DD immediately, but after it is deposited in his account, the withdrawal must be done. Can do.
- DD cannot bounce: If you have paid someone by check and there is not enough money in your account then it may bounce. Keep in mind that check bounce is a criminal act. On the contrary, the draft can never bounce as it is made only through cash or the amount deposited in the account i.e. the payment for the draft has already been done.
- Fund transfer time: Sometimes it happens that it takes several days to transfer funds from standard cheque. On the other hand, the amount paid through draft reaches the target account in just one working day.
- DD More Secure: The biggest difference between a check and a draft is security, due to which drafts are used for large amount transactions. If the check account is not paid and it is lost, then any person can encash it if he wants to encash it. On the contrary, if payment is made only in the bank account through draft, then even if someone tries to redeem it, then this money will be transferred to the same target account for which it was made. If lost, it can be canceled. As per RBI rules to thwart money laundering attempts, it is necessary to print the name of the buyer on the DD and this rule came into effect on 15 September 2018.
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