A Demand Draft (DD) is a type of payment instrument used in financial transactions. It is a written order by one bank to another bank, directing the recipient bank to pay a certain amount of money to a specified beneficiary or payee. Demand drafts are typically used for larger transactions such as the payment of college fees, buying a property, or paying for goods and services.
Details of Demand Draft
A demand draft (DD) serves as a safe and secure modes of payment for availing various transactions. Below given are some of the key details of DD-
- Issuer: A demand draft is issued by the bank on behalf of the customer who has requested it.
- Payee: Name of the recipient/payee is mentioned on the DD.
- Amount: The demand draft mentions the amount of money of you want to pay to the payee.
- Date: The DD also mentions the date on which it was issued.
- Validity: The validity of the DD is mentioned on the form itself.
- Charges: The issuer bank might charge a fee for using the DD. This charge might differ from bank to bank depending on the amount and issuing bank.
Types of Demand Draft
There are two types of Demand Draft in India:
Sight Demand Draft
A Sight Demand Draft is a type of DD that is payable immediately upon presentation to the bank or financial institution. This means that the payee can receive payment as soon as they present the Sight Demand Draft to the bank or institution for payment. Sight Demand Drafts are commonly used for urgent or time-sensitive payments, such as the payment of bills, fees, or salaries.
Time Demand Draft
A time-demand draft is a type of payment method that is not due for immediate payment but has a predetermined date of payment in the future. The draft only becomes fully payable after a specified period has elapsed since the payee received the goods. In international trade, some shipping companies use time-demand drafts, where importers may issue a draft to exporters. However, the final payment is only made 15 days after the importers have received the shipment, the products, and the transfer of ownership.
Details of Demand Draft Form
To obtain a demand draft or DD Form, you need to fill out a form that contains the following details:
- Name of the person or organization to whom the draft is payable
- Amount of the draft in figures and words
- Date of issuance of the draft
- Name of the bank or financial institution from which the draft is to be issued
- The branch of the bank or financial institution from which the draft is to be issued
- Your account number and the account from which the draft is to be drawn
- Your signature
Validity of Demand Draft
A demand draft is a financial instrument and demand draft’s validity is for a certain period of time. The validity period for a demand draft varies from bank to bank, and it can range from six months to a year or more.
Generally, the validity period for a demand draft is 3 months from the date of issuance. This means that the recipient of the demand draft must present it to the bank for payment within this period. If the demand draft is not presented for payment within the validity period, it may be considered as expired or stale.
Demand Draft Charges
|Name of the Bank||Demand Draft Charges|
|State Bank of India||Up to Rs.5,000 – Rs.25 Rs.5,000 to Rs.10,000 – Rs.50 Rs.10,000 to Rs.1 lakh – Rs.5 per Rs.1,000 (Min. Rs.60) Above Rs.1 lakh – Rs.4 per Rs.1,000 (Min. Rs.600; Max. Rs.2,000)|
|HDFC (Through bank)||Up to Rs.50,000 – Rs.75 (Rs.50 via Phonebanking) Rs.50,000 to Rs.1 lakh – Rs.2.50 per Rs.1,000 (Min. Rs.100) Above Rs.1 lakh – Rs.2 per Rs.1,000 (Min. Rs.250; Max. Rs.5,000)|
|HDFC (Through Netbanking)||Up to Rs.1 lakh – Rs.30 Third-party DD up to Rs.50,000 – Rs.100 (Limit per customer ID per day)|
|ICICI Bank||Up to Rs.25,000 per day – Nil Above Rs.25,000 – Rs.3 per Rs.1,000 (Min.Rs.75; Max. Rs.15,000)|
|Axis Bank||At Axis Bank- 15 DDs free per day, after which Rs.50 per DD At other locations – Rs.1 per Rs.1,000 (Min.Rs.25 per DD)|
|HSBC||Up to Rs.1 lakh – Rs.100 Rs.1 lakh and above – 0.1% of DD amount (Max. Rs.2,500) Non-bank locations (correspondent banks) – 0.3% of DD amount (Min. Rs.100) Non-bank locations (inter-branch transfers)- Free|
|Bank of Baroda||Up to Rs.5,000 – Rs.50 Rs.5,000 to Rs.1 lakh – Rs.3 per Rs.1,000 (Min. Rs.50; Max. Rs.300) Above Rs.1 lakh – Rs.5 per Rs.1,000 (Min. Rs.500; Max. Rs.15,000)|
|Punjab National Bank||Up to Rs.10,000 – Rs.40 Above Rs.10,000 – Rs.4 per Rs.1,000 (Min. Rs.50; Max. Rs.12,000)Individuals (Urban, semi-urban, & metro branches) – Up to Rs.10,000 – Rs.35 Above Rs.10,000 – Rs.3.50 per Rs.1,000 (Min. Rs.40; Max. Rs.12,000)Individuals (Rural branches, pensioners, & senior citizens) Up to Rs.10,000 – Rs.30 Above Rs.10,000 – Rs.3 per Rs.1,000 (Min. Rs.30; Max. Rs.12,000)Students (Education/exam fees only) Up to Rs.5,000 – Rs.20 Above Rs.5,000 – Normal charges applicable|
Demand Draft Number
Each demand draft in India is assigned a unique number by the bank that issues it. This number is known as the DD number, and it is used to track the status of the demand draft. The DD number is a 6-digit numeric code, or a serial number found at the bottom of the instrument and next to it is the Magnetic Ink Character Recognition (MICR) code. The DD number is typically printed on the demand draft itself, along with other details such as the name of the beneficiary, the amount of the draft, and the date of issue.
Demand Draft : FAQs
The fees charged for a DD vary from bank to bank, and may also depend on the amount being transferred. Generally, banks charge a fixed fee, as well as a percentage of the amount being transferred.
The maximum amount for a DD varies from bank to bank, but is usually capped at around Rs. 50,000 to Rs. 10 lakh. If the amount exceeds the limit set by the bank, the buyer may need to obtain multiple DDs or opt for an alternative mode of payment.
If a DD is lost or stolen, the buyer can request the bank to stop payment on the DD and issue a new one. However, the bank may charge a fee for this service. It is important to note that once a DD is issued, it becomes the property of the payee, and the buyer cannot cancel the DD without the payee’s consent.
A DD can be cancelled or refunded, but only with the payee’s consent. If the payee agrees to cancel the DD, the buyer can request the bank to stop payment and issue a refund. However, the bank may charge a fee for this service. It is important to note that if the payee does not consent to the cancellation, the buyer cannot cancel the DD.
The validity period for a demand draft varies from bank to bank, and it can range from three months to a year or more.