Question

What is demand drafts?

Answer 1

the paper similar to cheque is given
which shows that the money is really present and is being reserved for the demand drafted person
people can cheat people by giving cheque whith a large amount and really no money in account so demand draft ensures it that money is present

Answer 2

The Demand Draft is a pre-paid Negotiable Instrument, wherein the drawee bank undertakes to make payment in full when the instrument is presented by the payee for payment. The demand draft is made payable on a specified branch of a bank at a specified centre. In many transactions cheque is not usually accepted as the drawer and payee are unknown and there will be credit risk as cheque may bounce. So, in such cases Demand draft is accepted where the transfer of money is guaranteed. Demand draft is valid for period of 3 months.

A Demand Draft is payable on demandA Demand Draft can NOT be paid to a bearer.  In order to obtain payment, the beneficiary has to either present the instrument directly to the branch concerned or have it collected by his / her bank through the clearing mechanism.Demand draft is discussed in section 85(A) of the NI Act.Negotiable Instruments Act 1881.

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