Cheque Vs Demand Draft
Cheque:
Cheque is a negotiable instrument instructing a bank to pay a specific amount
from a specified account held in the maker/depositor’s name with that bank.
Demand
Draft: Demand Draft (DD) is also a negotiable instrument used for effecting
transfer of money.
Difference between Cheque and Demand Draft
- A cheque is issued by an individual, whereas demand draft is issued by a bank.
- A cheque is drawn by an account holder of a bank, whereas DD is drawn by one branch of a bank on another branch of the same bank.
- In a cheque, the drawer and drawee are different persons. But in a draft, both the drawer and drawee are the same bank.
- A cheque can be dishonoured for insufficient balance in a account. But there is a certainty of payment in the case of draft and hence it cannot be dishonoured.
- Payment of a cheque can be stopped by the drawer of the cheque, whereas payment of the draft cannot be stopped.
- A cheque can be made payable either to a bearer or order. But the DD is always payable to order of a certain person.
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