Demand Draft Meaning | Validity, DD Making Charges | Online DD Process

What Is Demand Draft Meaning | How To Make Demand Draft | Online DD Process |Demand Draft Validity |DD Making Charges

A Demand Draft, or DD, is a negotiable document that the payer pays in advance to the bank. The bank then acts as the payee’s payer on behalf of the person who requested the DD. If the payer has a bank account with the bank from which he wants a DD, he can pay with it. Others can pay for DD in cash.

You will be required to provide your PAN data to the bank for payments over Rs. 50,000. Otherwise, you merely need to produce your ID and proof of address to the bank for lower sums. A DD is valid for three months after it is issued.

Demand Draft

About Demand Draft

A demand draft, sometimes known as a DD, is a bank-issued negotiable instrument. The term “negotiable instrument” refers to a document that promises a specific amount of payment while also providing the payee’s name. In any circumstance, it cannot be transmitted to another person.

The bank issues a draft to a customer (drawer) instructing another bank or its own branch to pay the payee the specified amount.

Demand Drafts are similar to checks, except they are more secure and difficult to counterfeit. This is because a demand draft must be paid before it can be sent to the bank, whereas a check can be sent without checking that there is sufficient money in your bank account. As a result, checks can bounce, but drafts guarantee secure and timely payment.

On-demand, the drafts are payable. It is not possible to pay it to the bearer; instead, the beneficiary must show the instrument to the branch immediately. It can also be collected through the bank’s clearing system.

Demand drafts are typically issued when the parties are unfamiliar with each other and lack trust. It’s useful in these cases because there’s absolutely no danger of fraud or counterfeiting.

Demand Draft Charges

When a consumer goes to a bank to obtain a Demand Draft, he must pay the bank fees known as Demand Draft Charges. Each bank calculates the fees differently, so you’ll need to check their website or chat with a representative to find out the actual amount you’ll be paid for a DD.

The average charges levied by most Indian banks to issue a Demand Draft are shown in the table below:

Demand Draft AmountDD Charges
Up to Rs. 5,000Rs. 25
Rs. 5,000 to Rs. 10,000Rs. 50
Rs. 10,000 to Rs. 1 lakhRs. 5 per thousand or part thereof. (Minimum Rs. 60)
Above Rs. 1 lakhRs. 4 per thousand or part thereof. (Minimum Rs. 600 and maximum Rs. 2,000)

You can have the DD revalidated if it expires before it is used. For this service, banks charge Rs. 200 plus GST. For revalidation, you must fill out a form and provide the original DD.

You can get a duplicate DD printed for Rs. 200 + GST if your DD is lost or stolen. To use this service, you must send a copy of your DD, your ID card, and a form.

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Demand Drafts’ Characteristics (DD)

In comparison to cash and checks, demand drafts are still popular since they are safe and can only be cashed by the payee. Here are some characteristics of DD’s:

  • If a customer only wants to pay the payee after a specified date, he can have the bank issue a Demand Draft for that date. Only after that set date will the payee be allowed to receive the payment. Customers frequently use timed Demand Drafts to pay for services. They use the project’s completion date as the date from which the DD is due.
  • Customers who need to make payments in a foreign currency can go to a bank and obtain a Demand Draft in that currency. The fees for foreign currency DDs are greater than those for Indian currency DDs. This can make it easier for people to transmit money overseas in a secure manner.
  • If a consumer is concerned about the security of his funds when he turns over the Demand Draft, he might choose for a crossed Demand Draft. Over the counter, a crossed DD cannot be cashed. Regardless of who bears the DD, the payment is placed in the payee’s account. All Demand Drafts worth more than Rs. 50,000 must be crossed.
  • The payer has the option to cancel the Demand Draft before the payee cashes it. To seek cancellation, the payer must go to the bank and show the required paperwork. If the DD was paid in cash, the original DD, cash receipt, and Demand Draft cancellation form must all be submitted.If the payer utilized his bank account, the actual DD must be submitted with the Demand Draft cancellation form. Before refunding the balance, the bank will deduct the cancellation fees.
  • If you lose your Demand Draft, you must sign an Indemnity Bond for the issuing bank on stamp paper. When you go to the bank, a copy (photo or Xerox copy) can be useful. It will take some time for the bank to process the payment. Some banks pay for missing demand drafts within a week, while others wait until the DD’s expiration date. In any event, they will deduct charges from your return before issuing it.

Whether you receive a Demand Draft as a form of payment from a payer or have it issued by a bank as a payer, always double-check the information on it. The following are the key fields on a Demand Draft (DD) and the values they hold:

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DD Details

Field in the DDField Details
Bank branchThe branch of the bank issuing the DD
To PayDetails of the payee
DateDate of issue of DD (Validity period is 3 months from this date)
Amount (in words)The amount payable to the payee in words
Amount (in figures)The amount payable to the payee in figures
BranchThe bank branch that pays the amount to the payee
DD numberA Unique Number Assigned to the DD
SignatureSignatures of the officers of the bank branch issuing DD

It is recommended that you photograph or obtain a copy of the Demand Draft. You can use this copy to obtain a duplicate DD issued if the original is lost or stolen.

How Does DD Work?

The draft facility is open to anyone, regardless of whether or not they have a bank account. A demand draft can be issued by any person who just wants to pay a certain amount of sum to an institution or to someone with proof of payment. Individuals can request a draft form from their bank or fill out the form online. The sum specified on the form can be paid in cash or by check.

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Different types of Demand Draft

There are two different kinds of demand drafts:

Demand Draft on Sight: Only after the verification of appropriate documents is this form of DD accepted and paid. If the payee fails to submit any of the needed documentation, he or she will not be allowed to collect any funds.

Time Demand Draft: This type of DD is payable only after a certain time period of time has passed, and it cannot be drawn from the bank before then.

How Do You Make Demand Draft?

Demand draft forms can be obtained from the bank or filled out online. You must provide vital information such as your payment method (cheque or cash), the beneficiary’s name, the location where the draft will be cashed, the cheque number, your bank account number, and your signature. If you’re paying by cheque for more than Rs. 50,000, you’ll also need to submit your PAN card information.

You must pay specific fees for the draft, which are determined by the bank’s policies. The charges may differ, but there is always a criterion. The following is a list of fees collected by the country’s most well-known banks.

Demand Draft Issued through Cheque

SBIUp to Rs. 5,000Rs. 25 + GST
From Rs. 5,000 to Rs. 10,000Rs. 50 + GST
From Rs. 10,000 to Rs. 1 lakhRs. 5 per part of Rs. 1,000 which is Min. Rs. 55 & Max. Rs. 15,000
ICICIUp to Rs. 10,000Rs. 50 + GST
More than Rs. 10,000Rs. 3 per part of Rs. 1,000 which is Min. Rs. 75 & Max. Rs. 15,000

Demand Draft Issued by Cash

SBIUp to Rs. 5000No cash handling charges will be levied in addition to the previously explained charges for a cash transaction.
From Rs. 5,000 to Rs, 10,000
From Rs. 10,000 to Rs. 1 lakh
ICICIUp to Rs. 10,000Rs. 4 per thousand rupees subject to a minimum of Rs. 100 & Maximum. of 15,000 rupees
More than Rs. 10,000

Process to Cancel a DD

The bank accepts the money you give to issue a draft instantly, whether it is cash or a check, and you must go to the bank to cancel a DD because there is no online option for it. There are two situations in which you may need to cancel the DD, depending on the payment method.

You Paid in Cash: To receive a refund, you must send the original draft to the bank along with the receipt. The bank would remove between Rs. 100 and Rs. 150 from your account.

If you paid by cheque and the amount was debited from your bank account, you must send the original draft along with a correctly completed cancellation form, and the amount will be reimbursed back to your account with a deduction of 10%.

In any case, if you misplace the DD or it gets lost in the mail, you may be in a problem. This is because the bank will want proof of the instrument’s issuance. However, if you make a request and the bank cooperates, you may be able to obtain a copy of the draft receipt and cancel the draft before it is canceled.

What Should You Do If Your Demand Draft Has Expired?

The validity of a draft is three months from the date of issue. If the draft is not given to the bank within that time frame, it will expire. Despite the fact that the money has expired, it will not be reimbursed to the drawer’s account. The drawer must then go to the bank to have the draft revalidated. One thing to keep in mind is that the payee or anybody else cannot visit the bank to revalidate the DD under any circumstances.

Before revalidating the draft and extending its usage for another three months, the bank verifies the original details. A revalidated draft, on the other hand, cannot be revalidated again.

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Apply for Demand Draft Online

You can quickly apply for a DD online if you have registered for net banking with your bank. To get a demand draft, go to your bank’s website and select “Issue a Demand Draft.” The “Payments and Transfers” menu is usually where you’ll find it. Fill in the required information and after that submit your payment. Most banks provide you the choice of picking up the DD in person or having it delivered to your location by courier. If you wish to pick up your DD in person, you must go to the bank branch where you have an account and display an acknowledgment slip you received when you applied for a DD online. For a courier, you must provide your address information and pay the courier fees.

Filling of DD Form

You must fill out a DD form and submit it to the bank if you wish to make a payment with a Demand Draft. To issue a DD, the bank will deduct the funds from your account or collect cash from you.

You must complete in the following fields on the DD form:

Field in the DD FormDetails to be Filled
Name of the DrawerMention Your Name
Name of the DraweeMention Full Name of the Drawee
Name of the City where the DD is PayableMentionName of the City of the Drawee
Amount (in Words)Mention the Amount Payable to the Drawee in Words
Amount (in Figures)Mention the Amount Payable to the Drawee in Figures
ExchangeMentionFees Charged by the Bank for the DD
Total AmountTotal Amount Payable to the Bank (in Figures)
Signature of the DrawerYour Signature
Name and Address of the DrawerYour Full Name and Address

The drawer is referred to as the “applicant” or “payer” on numerous DD forms, whereas the drawee is referred to as the “payee.”

My DD is no longer valid. What am I supposed to do now?

Demand drafts have a three-month validity term from the date of issue. The DD becomes void if it is not presented within the validity period. However, the money is not automatically refunded to the drawer. If the DD has expired, the drawer can file an application to the issuing bank for revalidation. Before revalidating the DD for another three months, the issuing bank will review the records and details. The revalidated DD cannot be revalidated if it is not presented. A DD cannot be revalidated by the drawee/payee.

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