"CHEQUE VS. DEMAND DRAFT"
For SBI PO-IBPS PO/ Clerk-RRBs
CHEQUE:
As per Section 6A cheque is a 1. Drawn on specified bank, 2. Bill of exchange and 3. Not expressed to be payable
otherwise than on demand. It includes electronic image of a truncated cheque
and also an electronic cheque.
Parties to a cheque
are drawer (the account holder), Drawee (the bank with whom the account is
maintained) and payee (the person named in the cheque). The other parties also
come into picture subsequently and include endorser and endorsee. Drawee of a
cheque can be a bank only.
Demand Draft (DD):
A demand draft is an instrument
used for resulting transfer of money. It is a Negotiable Instrument. Cheque and
Demand-Draft both are used for Transfer of money. You can 100% trust a DD. It
is a banker's check. A check may be dishonored for deficiency of funds a Demand
Draft cannot. Cheque is written by an individual and Demand draft is issued by
a bank. People believe banks more than individuals.
Difference between Cheque and Demand
Draft:
|
Sl. No.
|
Cheque
|
Demand
Draft (DD)
|
|
1.
|
It is issued by individual
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It is issued by a bank
|
|
2.
|
Drawer and Drawee are different persons, can be same also
if cheque is drawn on self
|
Drawer and Drawee are same bank with different branches
|
|
3.
|
It is defined in the Negotiable Instrument Act, 1881
|
Although a type of Negotiable instrument only, it is not
defined in the Act.
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4.
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There are no bank charge to issue a cheque
|
Different banks can charge differently for the issue of
demand draft
|
|
5.
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Payment is made after presenting cheque for encashing
|
Payment is paid before presenting demand draft for
encashing
|
|
6.
|
In case of insufficient balance in the account, it can
be dishonored
|
It cannot be dishonored because payment is already done
for it.
|
|
7.
|
Individual or Party issuing cheque must have a savings
or current account in the bank
|
Individual or Party getting issued a demand draft may
not be necessarily have bank account in the bank.
|
|
8.
|
It requires a signature of individual or party
|
It requires a signature of banking authority and stamp
of bank
|
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