Fund Transfer in banks is done through multiple ways and methods like cheques, demand drafts, money orders etc. With the latest growth in digital economy in the banking sector of India, newer methods have originated and they have gained popularity due to their faster processing time and ease of the processes. These methods are RTGS, NEFT and IMPS amongst some others. Even though these new methods have gained popularity, traditional methods like demand draft are still extensively used throughout.
Demand Draft has not lost its relevance because multiple educational institutions, business corporates and other bodies use this mode of transaction for their daily operations. This is primarily because of the fact that demand drafts are highly reliable and cannot be copied easily.
How much time does it take to clear Demand Draft?
A DD’s timeline or clearing period differs between banks. They are usually cleared by the end of the workday or within a half-hour. Some banks may need three business days. Additionally, a DD of a large amount will only be credited to a bank account rather than being given in cash. For instance, SBI would settle DDs up to Rs. 50,000 in cash. Anything more than that will only be sent to a bank account.
Demand drafts are negotiable instruments where the money is paid before the bank issues the DD; as a result, they are safe and cannot bounce like cheques may. A demand draft is valid for three months starting on the day the bank that issued it issues it, in accordance with Reserve Bank of India (RBI) regulations. You can get a written revalidation of the DD from the issuing bank after the third month has passed. Only one revalidation of a DD per year is permitted, and after that time the bank will cancel the existing DD and issue a new one when the applicant has paid the accompanying fees.
Demand Draft Clearing Process
Let’s look at the Demand Draft Clearing procedure that you need to follow:
To encash or clear the Demand Draft, the person who receives the DD or the “payee” has to present it to his bank. Along with it, he needs to submit the documents that the bank asks for verification. After the verification process is done, the amount will get transferred to the payee’s account.
Demand Draft Clearing Time – FAQs
It usually takes thirty minutes or a maximum of 2-3 days if it is of a substantial amount.
A DD stays valid for up to three months. It can get revalidated once a year after getting written authorisation from the bank.
You can encash a DD by providing it to your bank along with verification documents. The bank will then deposit the amount in your bank account.
DD stands for Demand Draft.