What is Demand Draft? Meaning, Types and Benefits
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  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors

Demand Draft Meaning

A demand draft is a financial document issued by banks, known for its trustworthiness and convenience. It provides a tangible assurance to both the payer and payee that the agreed-upon funds will be transferred securely.

Today, digital transactions dominate the financial world. But despite that, some financial instruments continue to serve as reliable and secure means of transferring funds. Among them, the demand draft remains a reliable choice for many individuals and businesses.

In this era of instant digital payments, understanding demand drafts is prudent and valuable for various financial transactions. This article will discuss what a demand draft is, what its features are, and how you can obtain it.

What is a Demand Draft?

A demand draft, also referred to as a bank draft, is a financial instrument issued by a bank on behalf of a customer. You give the bank the money you want to pay, and they create a demand draft for that amount.

It's a safe way to make sure the payment is guaranteed because the bank already has the money. The person or business you're paying can then deposit or cash the demand draft to get the money. It's a bit like asking the bank to write a check for you using the money you provided upfront.

Types of Demand Draft (DD)

In India, there are two primary types of Demand Drafts:

1. Sight Demand Draft

This demand draft is typically paid to the payee immediately upon presentation. However, in some cases, the payment may be subject to verification of certain documents. The bank will not release the payment if the payee fails to provide the required documents.

2. Time Demand Draft

This demand draft is paid by the bank only after a specific period of time has passed, i.e. the demand draft clearing time. Additionally, it has an expiry date, after which the bank will not honour the payment. The payment is made after the predetermined time has elapsed.

What Details are Required for Demand Drafts?

A Demand Draft requires specific details to ensure accurate and successful transactions. Here is a table summarising the essential information needed when requesting a Demand Draft:

The field in Demand Draft Details
To Pay Payee’s details
Date The date of the issue of DD
Bank Branch The branch from which is issuing the DD
Amount Add the amount payable in words
DD Number It is a unique number given to a DD
Signature & Stamp Signature & stamp of the bank official issuing the DD


How to Make a Demand Draft Online & Offline?

There are mainly two ways to make a demand draft - Offline and Online. Here are the steps you can take for each mode:

Offline Process of Creating DD

To make a Demand Draft from a bank branch, follow these steps:

Step 1: Visit Bank Branch

Go to the specific bank branch where you want to obtain the DD.

Step 2: Request Application Form

Ask the bank staff for a demand draft application form.

Step 3: Complete Form

Fill out the application form with accurate details.

Step 4: Review and Sign

Carefully review the filled-in form; if everything is correct, sign it.

Step 5: Submit the Form

Hand in the completed application form to the counter designated for DD issuance.

Step 6: Make Payment

Choose your payment method (cash, check, or deduct from your account if you have one with the bank) to cover the DD amount.

Also Read About: सेविंग्स बैंक खाता क्या है


Online Process of Creating DD

To make a Demand Draft online using Internet banking, follow these steps:

Step 1: Access Your Bank's Official Website

Log in to your bank's official website and access your Internet banking account.

Step 2: Navigate to "Request and Enquiries"

Find your online banking account's "Request and Enquiries" section.

Step 3: Select "Issue Demand Draft"

Click the "Issue Demand Draft" option.

Step 4: Choose the Bank Account

Select the bank account from which you want the DD amount deducted.

Step 5: Provide DD Details

Enter the DD amount, payee's details, and purpose (if required).

Step 6: Specify the Branch

Enter the 5-digit branch code of the bank from which you want to obtain the DD. You can use the branch locator tool if you don't know it.

Step 7: Select DD/Banker Cheque Payable Location

Choose the branch where the DD should be payable.

Step 8: Choose Delivery Method

Decide on the delivery method - either collecting it in person or requesting courier delivery.

Step 9: Submit Your Request

Confirm your choices and click "Submit."

Read also: How to fill Cheque

Kotak Bank Demand Draft Form Download

Enjoy a seamless experience by downloading your Kotak Mahindra Bank Demand Draft form directly from our website. Access the form effortlessly and proceed with your transactions. Click below to download now.

Click on PDF to Download Demand Draft Format

What are the Charges for Demand Draft?

Demand Draft charges can vary among banks as there are no fixed authorities' rates. The charges are:

1. Draft Preparation Charges

Typically, these charges range from Rs 1.50 to Rs 4 per thousand of the DD amount. Service tax is also applicable to these charges. For smaller amounts, flat charges may apply.

2. Cancellation Charges

If you need to cancel a DD, the charges usually range from Rs 100 to Rs 300.

Things to Consider While Issuing a Demand Draft

When issuing a Demand Draft (DD), you must consider some things. Some of these things are:

1. Payment Method

If you plan to pay in cash, complete the DD form and provide the required amount to obtain the DD.

2. PAN Details

If the DD amount exceeds Rs 50,000, you must furnish your PAN details to the bank as per regulatory requirements.

3. Bank Account Payment

When using your bank account, provide the necessary account details to the bank. The bank will deduct the funds and issue the DD promptly.

4. Verification of DD Details

Before leaving the bank, carefully review all the details on the DD, including the payee's information, to ensure accuracy.

What are the Advantages of Demand Draft (DD)?

A Demand Draft offers several advantages. Some of them are:

  • DDs are more secure than cheques as they cannot be counterfeited.
  • DDs are prepaid; they cannot be bounced or dishonoured due to insufficient funds in the payer’s account.
  • DDs are accepted nationwide and are one of the most reliable payment methods.
  • The payee does not need a bank account to encash a DD.
  • The amount of a DD is fixed, meaning that it cannot be altered or tampered with, ensuring the payee receives the correct amount.

Read also: How to Recover Money Transferred to a Wrong Account

Difference between a Cheque and a Demand Draft

A cheque and a demand draft are both financial instruments for making payments. However, they differ in various terms. Here is a table of differences:


Parameter Cheque Demand Draft (DD)
Issuance Issued by a customer of the bank Issued by the bank
Payment Guarantee Can be dishonoured due to insufficient balance It cannot be dishonoured since the money is already paid to the bank
Cancellation Can be cancelled by the customer Cannot be cancelled
Availability Account holder Both account holders and non-account holders
Bank Charges for Issuance No Yes
Signature Requirement Requires the account holder’s signature to transfer the amount Does not require a signature to complete the transaction


A demand draft is a reliable and secure payment method, especially in situations where traditional forms of payment may not be feasible or safe. Its unique features make it a preferred choice for various financial transactions. You must stay informed about any updates or changes in banking procedures to make the most of the available financial instruments.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.