Comprehensive Guide to Demand Drafts: Forms, Charges, and BenefitsEverything You Need to Know About Demand Drafts for FY 2025-26

Definition and Functionality

A demand draft (DD) is a secure financial instrument used for transferring money.

• Issued by a bank to transfer funds from one account to another.

• Ensures immediate payment to the recipient.

• Prepaid instrument, funds are reserved by the bank.

Key Features

Demand drafts are widely used for their reliability.

• Cannot bounce like cheques as funds are pre-reserved.

• Does not require the signature of the account holder.

• Can be obtained from banks without holding an account there.

Charges by Major Banks

Different banks have varying charges for issuing demand drafts.

• State Bank of India: ₹25 for up to ₹5,000, ₹50 for ₹5,000 to ₹10,000.

• HDFC Bank: ₹75 for branch issuance up to ₹5,000, ₹2.50 per ₹1,000 for amounts above ₹10,000.

• ICICI Bank: No charge for up to ₹10,000, ₹3 per ₹1,000 for amounts above ₹10,000.

Factors Affecting Charges

Charges depend on several factors including the amount and bank policies.

• Amount of the demand draft.

• Bank's internal policy and service charges.

• Mode of issuance (branch, online, etc.).

HDFC Demand Draft Form

Sample form details for HDFC Bank.

• Includes fields for payee name and amount.

• Requires drawer's signature and account details.

• Available at HDFC branches and online portal.

IDFC First Bank Demand Draft Form

Sample form details for IDFC First Bank.

• Includes fields for payee name and amount.

• Requires drawer's signature and account details.

• Available at IDFC First Bank branches and online portal.

Validity Period

Demand drafts have a specific validity period.

• Valid for 3 months from the date of issuance.

• Must be presented within this period to remain valid.

• Revalidation possible upon request to the issuing bank.

Revalidation Process

Steps to revalidate an expired demand draft.

• Submit a formal application to the issuing bank.

• Bank verifies details and may revalidate for another 3 months.

• Revalidation is a one-time process and cannot be repeated.

Essential Documents

Documents needed to issue a demand draft.

• Name and address of the payee.

• Amount payable in figures and words.

• Drawer's signature and account details.

Additional Information

Other details that may be required.

• City where the DD is payable.

• Exchange fee charged by the bank.

• Total amount payable by the drawer to the bank.

Time Demand Draft

A type of demand draft with specific features.

• Payable after a certain period.

• Used for transactions requiring deferred payment.

• Common in business transactions.

Sight Demand Draft

Another type of demand draft with distinct characteristics.

• Payable on presentation.

• Ensures immediate payment to the recipient.

• Preferred for quick and secure transactions.

Security and Reliability

Demand drafts offer a secure payment method.

• Funds are pre-reserved, eliminating bounce risk.

• Widely accepted across various sectors.

• Ideal for large transactions requiring guaranteed payment.

Convenience and Accessibility

Ease of use and availability make demand drafts popular.

• Available at most banks, even without an account.

• Simple process for issuance and encashment.

• Can be used for both domestic and international transactions.

Key Differences

Understanding the differences between cheques and demand drafts.

• Cheques can bounce if funds are insufficient; DDs cannot.

• Cheques require drawer's signature; DDs do not.

• DDs are prepaid, ensuring guaranteed payment.

Usage Scenarios

When to use a cheque vs. a demand draft.

• Cheques are suitable for personal transactions.

• DDs are preferred for large, secure payments.

• DDs are often used in business and institutional payments.

Steps to Issue a Demand Draft

Follow these steps to make a demand draft offline.

• Visit the bank branch and fill out the DD form.

• Provide necessary documents and details.

• Pay the required amount and bank charges.

Receiving the Demand Draft

What to do after issuing a demand draft.

• Collect the issued demand draft from the bank.

• Verify all details on the draft for accuracy.

• Deliver the draft to the recipient for encashment.

Online Form Filling Process

Steps to fill a demand draft form online.

• Log in to the bank's net banking portal.

• Navigate to the demand draft section.

• Fill in the required details and submit the form.

Payment and Confirmation

Completing the online demand draft process.

• Pay the draft amount and applicable charges online.

• Receive confirmation and reference number.

• Collect the physical draft from the bank or request delivery.

Cancellation Process

Steps to cancel a demand draft.

• Visit the issuing bank branch with the original DD.

• Submit a cancellation request form.

• Bank processes the cancellation and refunds the amount.

Important Considerations

Things to keep in mind when cancelling a demand draft.

• Cancellation charges may apply as per bank policy.

• Refund is credited to the drawer's account.

• Cancellation is not possible if the draft is already encashed.