Bank Draft vs Bank Cheque: A Comprehensive Guide

A bank draft and a bank cheque may seem like similar financial instruments, but they have distinct differences that set them apart. Bank drafts are essentially guaranteed payments that allow the payee to directly deposit the funds into their account.

In contrast, bank cheques are more like personal cheques, but issued by a bank. This means that the payee must physically deposit the cheque into their account at a bank.

The process of issuing a bank draft is more formal and requires a higher level of verification than issuing a bank cheque. This makes bank drafts more secure and reliable, especially for large transactions.

A Banker's Cheque is an instrument issued by a bank on behalf of a customer, containing an order to pay a certain sum to a specified person within the city.

The validity period of a Banker's Cheque is 3 months, although it can be re-validated with some legal formalities.

It's pre-printed with the words 'not negotiable', meaning it can't be further negotiated.

A Demand Draft, on the other hand, is a negotiable instrument issued by a bank on behalf of a customer, containing an order to pay a certain sum to the payee from one branch to another branch of the same bank.

The validity period of a Demand Draft is also 3 months, but it can be re-validated with an application.

Payment for a Demand Draft is done in advance, making it impossible to dishonor.

A bank draft is a secure way to transfer funds, and it works as follows: the individual making the payment submits a request for a bank draft with their financial institution.

The bank reviews the individual's account to see if they have sufficient funds to transfer, which is a crucial step in the process.

If the individual has sufficient funds, the bank approves the request, withdraws funds from their account, and issues a bank draft for an equivalent amount.

The bank draft usually comes with a small fee, but most banking accounts offer a certain number of free bank drafts per year.

The bank draft is issued in the form of a document and is drafted in the name of the individual who will be depositing it and receiving the money.

The individual purchasing the bank draft is responsible for ensuring that it is delivered to the payee.

Once the payee presents the bank draft for payment, their identity is verified with the name on the bank draft.

The funds are then deposited into the payee's account, which can take anywhere between 1-4 business days to process.

A Bank Draft and a Bank Cheque are both secure ways to pay someone, but they have some key differences.

A Bank Draft is a negotiable instrument used to transfer money from one person at one city to another person in another city. It's a bit more flexible in terms of where it can be cleared, as it can be cleared at any branch of the same bank.

Here are some key differences between a Bank Draft and a Bank Cheque:

A Bank Cheque, on the other hand, is pre-printed with the words "Not Negotiable", which means it can't be further negotiated. It's also prepaid, so the chances of dishonor are very low.

A demand draft is a negotiable instrument issued by a bank on behalf of a customer. It contains an order to pay a certain sum to the payee from one branch to another branch of the same bank.

The validity period of a demand draft is three months. However, it can be re-validated against an application.

A demand draft can never be dishonored because its payment is done in advance. This means the recipient can be sure to receive the money once the draft is deposited into their account.

Demand drafts are used where the payer and recipients are not in the same place, making it a convenient method for financial transactions.

A Bank Draft is a secure medium to pay the payer since the bank guarantees the payment.

The payer should have an account in the issuing bank and balance the account to cover the amount of the draft.

One of the key differences between Bank Draft and Bank Cheque is that Bank Draft can be cleared at any branch of the same bank, whereas Bank Cheque can only be cleared in any branch of the same city.

Here's a comparison table to illustrate the key differences:

Bank Draft is a much easier and more convenient method for transferring a large sum of money than withdrawing a large sum of cash. Unlike an e-transfer, a Bank Draft does not have a maximum amount limit.

A bank draft is a much easier and more convenient method for transferring a large sum of money than withdrawing a large sum of cash.

Unlike an e-transfer, a bank draft does not have a maximum amount limit, making it a suitable option for big transactions.

It's also more convenient than withdrawing a large sum of cash, as it eliminates the need to carry a lot of money.

Bank drafts are commonly used when making large purchases, such as buying a house or car, due to their convenience and flexibility.

Overall, a bank draft offers a hassle-free way to transfer large amounts of money, making it a preferred choice for many people.

Bank drafts and bank cheques may seem similar, but they have some key differences.

One of the advantages of bank drafts is that they are a form of guaranteed payment. This means that the bank guarantees the payment, making it a secure option for both the sender and the receiver.

Bank drafts are issued by the bank at the request of the customer, and they transfer the amount to the destination account as per the instructions from the customer. This makes the process efficient and hassle-free.

The bank charges a minimal bank draft fee for the services provided, which is considerably lower than other forms of transfer. This makes bank drafts a cost-effective option for those who need to make large or frequent payments.

However, there are some disadvantages to bank drafts as well. One of the main disadvantages is that the process of getting a bank draft is time-consuming. The person needs to personally visit the bank branch to collect the draft, and the receiver has to present the draft to the bank for remittance.

Another disadvantage is that bank drafts are a bit expensive. The bank charges a specified amount over and above the amount to be transferred, which can add up quickly. Each bank has different charges, which are dependent upon the number of drafts to be made.

There are also deadlines to present the draft before the bank. If the drafts are somewhat older (2 weeks, for example), the bank refuses the remittance, and the refund process also takes time from the sender's point of view.

Here are the key advantages and disadvantages of bank drafts at a glance: