If you are looking for a safe and reliable way to transfer money, then Demand Draft (DD) is one of the options that you may want to consider. DD is a popular mode of payment in India, especially in the banking sector. However, before you start using DD, it is essential to understand what it is, how it works, and what its benefits and limitations are. In this article, we will explore DD in detail, including DD full form, meaning, and significance in the banking industry.
Demand Draft, also known as Banker’s Cheque, is a financial instrument that is issued by a bank on behalf of its customers. It is a secure and convenient way of transferring money within and outside the country. DD is widely used in India for making payments, such as educational fees, travel expenses, and buying property, among others.
DD Full Form
The full form of DD is “Demand Draft.” It is also known as “Banker’s Cheque” in some countries.
How does a Demand Draft work?
A Demand Draft works like a cheque, but it is considered to be safer and more reliable. When you want to make a payment using a DD, you have to visit your bank and ask for a DD form. You have to fill in the details of the beneficiary, such as their name, account number, and bank name, and the amount that you want to transfer. You also have to pay the DD charges and the amount that you want to transfer in advance.
Once you have filled in the form and paid the charges, the bank will issue a DD in favor of the beneficiary. The DD will have a unique number, which is known as the DD number. The beneficiary can deposit the DD in their bank account and receive the payment after the clearance period.
Types of Demand Draft
There are two types of Demand Draft:
- Local Demand Draft: This type of DD is used for transferring money within the same city or state. The clearance period for a local DD is usually 1-2 days.
- Outstation Demand Draft: This type of DD is used for transferring money outside the city or state. The clearance period for an outstation DD is usually 2-3 days.
Difference between Demand Draft and Cheque
Both Demand Draft and Cheque are financial instruments used for making payments. However, there are some differences between them:
- DD is a prepaid instrument, whereas a Cheque is a postpaid instrument.
- DD is considered to be safer and more reliable than a Cheque.
- DD can be used for making payments within and outside the country, whereas a Cheque can be used only within the country.
Advantages of Demand Draft
There are several advantages of using Demand Draft for making payments:
- Safety and security: DD is considered to be a safe and secure way of transferring money, as it is issued by a bank.
- No risk of bouncing: DD is a prepaid instrument, which means that the payment is guaranteed. There is no risk of bouncing, as in the case of a Cheque.
- Widely accepted: DD is widely accepted in India for making payments.
- Convenient: DD is a convenient way of making payments, as you can easily get it issued from your bank and send it to the beneficiary.
- Secure: DD is a secure way of making payments, as the beneficiary has to deposit the DD in their bank account to receive the payment.
Limitations of Demand Draft
Along with its advantages, there are also some limitations of using Demand Draft:
- Time-consuming: The process of getting a DD issued and deposited can be time-consuming, especially for outstation DDs.
- Charges: The banks charge a fee for issuing a DD, which can increase the cost of the transaction.
- Risk of loss: If a DD is lost or stolen, it can be a lengthy process to get it reissued or canceled.
Charges for Demand Draft
The charges for issuing a DD vary from bank to bank and depend on the amount of the DD. Generally, the charges range from Rs. 50 to Rs. 500. However, some banks also offer free DD services for their customers, depending on their account type and balance.
How to make a Demand Draft?
To make a Demand Draft, you have to follow these steps:
- Visit your bank and ask for a DD form.
- Fill in the details of the beneficiary, such as their name, account number, and bank name.
- Fill in the amount that you want to transfer.
- Pay the DD charges and the amount that you want to transfer in advance.
- The bank will issue a DD in favor of the beneficiary with a unique DD number.
- Send the DD to the beneficiary through courier or post.
Cancellation of Demand Draft
If you want to cancel a DD, you have to visit your bank and submit a written request for cancellation. The bank will then verify your request and cancel the DD if it has not been deposited by the beneficiary. The cancellation charges may apply depending on the bank’s policy.
Precautions to be taken while using Demand Draft
To avoid any fraud or misuse of DD, you should take the following precautions:
- Keep the DD safely until you send it to the beneficiary.
- Do not share the DD number with anyone, except the beneficiary.
- Cross the DD with two parallel lines and write “Account Payee Only” to prevent it from being encashed by anyone other than the beneficiary.
- Verify the authenticity of the DD by checking the bank’s logo, watermark, and signature.
How to track a Demand Draft?
You can track the status of your DD by visiting your bank’s website or by contacting their customer care. You have to provide the DD number and other details to get the status.
DD in Digital India
With the increasing use of digital transactions, many banks now offer the facility of e-Demand Draft or Online DD. You can issue an e-DD from your internet banking account and send it to the beneficiary’s email address. The process of issuing and depositing e-DD is much faster and convenient than physical DD.
FAQs on Demand Draft
No, you cannot cancel a DD if it has been deposited by the beneficiary. You have to ask the beneficiary to return the DD and deposit the amount in your bank account.
Yes, you can get a refund if you cancel a DD before it has been deposited by the beneficiary. The bank will deduct the cancellation charges and refund the remaining amount to your account.
The time taken to issue a DD depends on the bank and the amount of the DD. Generally, it takes one or two working days to issue a DD.
There is no maximum limit for transferring money through a DD. However, some banks may have their own limits, which can vary from Rs. 50,000 to Rs. 10 lakhs.
Yes, you can get a duplicate DD if you have lost the original. You have to submit a written request to the bank along with the DD number and other details. The bank will charge a fee for issuing a duplicate DD.
Conclusion
Demand Draft is a secure and reliable way of transferring money within and outside the country. It is widely used in India for making payments, such as educational fees, travel expenses, and buying property, among others.
However, before using DD, you should understand its full form, meaning, and significance in the banking industry. You should also take the necessary precautions to avoid any fraud or misuse of DD.
Demand Draft is a useful financial instrument that enables safe and convenient transfer of money. With its many advantages, such as reliability, security, and acceptance, DDs are widely used in India for making payments for various purposes.
However, it is important to understand the full form and meaning of DD, as well as its limitations, charges, and precautions. By taking the necessary precautions, you can ensure that your DD transactions are safe and secure.