Explain Difference between Demand Draft and Cheque.
Answers
In cheque payment is made after presenting the cheque to the bank, while in DD is given after making payment to the bank.
A cheque can bounce due to insufficient balance. DD cannot be dishonored as the amount is paid beforehand.
Payment of cheque can be stopped by the drawee, whereas payment cannot be stopped in DD.
A cheque can be paid to bearer or order. While DD is paid to a person on order.
In cheque drawer and payee are different persons. In DD, both parties are banks.
A cheque needs signature to transfer amount, While DD does not require signature to transfer funds.
However, banks do charge certain amount depending on the amount on Demand draft. Outstation cheque are also charged.
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