Demand Draft – DD Form, How to Apply, Features, Advantages

The important fields on a Demand Draft (DD) and the values they contain have been discussed here:

Until net banking, mobile banking, credit cards, etc. had become popular, people used to make loan and other payments by DD. The risks associated with a demand draft are minimal as compared to a cheque which is the reason why DDs have always been preferred by many people over cheques for payment. However, there are still few risks involved with demand drafts, such as:

• A Demand Draft may be forged or stolen
• The banks issuing the DD may go out of business before the DD is deposited and cleared
• The drawee may not deposit the DD on time and it may become invalid
• The drawer may have made a mistake while getting the DD

It is important to fill in DD form with all necessary details. Here are few fields that you need to fill to get a DD issued by a bank:

• Name and Address of the drawer (your name)
• Name of the drawee
• Name and address of the payee
• Name of the city where DD is payable
• Amount payable to the drawee (in words)
• Amount payable to the drawee (in figures)
• Exchange (fee charged by the bank)
• Total amount payable by the drawer to the bank (in figures)
• Signature of the drawer
• Name and Address of the drawer

In many DD forms, drawer is referred as the “applicant”.

Step 1: Fill the DD form with all details mentioned above

Step 2: Make the payment either through cash or from your bank account.

Step 3: The bank verifies all details mentioned in the DD form.

Step 4: After successful verification and receipt of money, the bank issues the demand draft to the applicant.

Step 5: The applicant has to submit this DD to the payee and complete the transaction.

Step 1: Login to your bank’s official website via net banking service

Step 2: Search for ‘Request and Enquiries’ section on the website’s main page

Step 3: Search and click on Issue Demand Draft service

Step 4: Select the bank account from where you want the DD amount to be deducted

Step 5: Enter the DD details, such as DD amount, payee’s details, purpose, etc.

Step 6: Mention the 5-digit bank’s branch code from which you want to obtain DD

Step 7: Select the branch where you want the DD to be paid

Step 8: Select the delivery method – By courier or in-person

Step 9: Click on Submit to finish the process

• If you are going to pay for the DD in cash, submit the DD form and pay cash to get the DD.
• If you are going to pay from your bank account, you will need to furnish those details as well before you can get the DD. The bank will immediately deduct the money and issue you the DD.
• For amounts exceeding Rs. 50,000 or more, you will have to give your PAN details to the bank.
• For smaller amounts, you only need to present your ID and address proof to the bank.
• It is advisable to check the details on your DD including the drawee’s details, etc. before you leave the bank.
• Before you handover the DD to the payee, make sure to keep a copy (photocopy or photo) of the DD. This will help you if there are any problems with the DD.

• DD is payable on demand
• There is no stamp on a DD
• Can be negotiated by endorsement and delivery
• Not payable to bearer
• It cannot be stopped except by court order
• Amount is refunded if DD is not delivered
• The purchaser of the DD need not be a customer of the bank

• Unlike a personal cheque, demand draft is guaranteed by the bank. It means that the payee gets the guarantee for funds.
• Demand Draft is a more convenient method for transferring huge amounts. Unlike e-transfer, it doesn’t require the information of the payee and doesn’t have capping on fund transfer. Hence, demand drafts are commonly used whilst making huge purchases, such as payment of fees, medical bills, buying a car or a house, etc.
• A demand draft can be used for cross-border purchases and investments

Sight Demand Draft

Sight Demand Draft is a standard demand draft in which it is paid to the payee instantly upon presentation. The payment may be subject to verification of required and submitted documents. If the depositor fails to submit the required documents then the bank may hold the release of the payment.

Time Demand Draft

The demand draft is paid by the bank only after a specific period of time has passed which is the demand draft clearing time. Time demand draft has an expiry date after which the bank shall not release the payment. Moreover, the payment is made after a certain time has passed.

• A Demand Draft represents a transaction that has already taken place. Hence, it cannot be cancelled once it is delivered to the payee.
• If the demand draft gets lost, stolen, or altered with and the funds are cashed out by the wrong person, the bank is not responsible for replacing the lost money.
• Demand draft is valid only for 3 months and if not encashed in this time frame, the payee is at a loss of funds.

A demand draft cancellation letter is written to withdraw the raised demand draft for the transaction. There could be several reasons to cancel the demand draft. If an individual wants to cancel the raised demand draft, he/she will have to write a DD cancellation application to the bank where the individual has applied it and submit it to the bank.

Note: If you have paid in cash at the time of issuing your demand draft, you will be able to retrieve payment in cash only. However, if the payment is made through cheque, the amount will be credited to your bank account.

How to Write a DD Cancellation Letter

Individual before canceling the demand draft must keep in mind the below-mentioned points:

• Keep the tone of the letter formal
• The letter must be addressed to the branch manager
• Add a clear subject stating the reason for canceling the demand draft
• Add your account number, DD number, and the amount of DD in the body
• Explain the reason for canceling the DD
• Conclude the letter formally

Q. How long does it take for a demand draft to clear?

Ans. If you have a bank account in the same bank that issues the DD, the payment will be cleared within hours or in one business day. In the case the banks are different, it can take up to three working days.

Q. What is the DD charge for Rs. 1 Lakh?

Ans. The DD charge for Rs. 1 lakh shall vary from bank to bank. It may be free for some banks and some may charge a nominal charge for the same.

Q. What is the validity of the demand draft?

Ans. The demand draft is valid for 3 months from the date of issue, which is printed on the DD.

Q. Is a fee charged from payee at the time of encashment?

Ans. No, no fee is charged from the payee at the time of encashment by the bank.

Q. What will happen if I lose my demand draft?

Ans. If you lose your DD, you need to sign an Indemnity Bond in stamp paper for the issuing bank. A copy can be helpful to present when you visit the bank. The bank will take some time to process the payment. Some banks clear payments for lost demand drafts in one week while others wait until the expiry date of the DD. In any case, they will deduct charges before issuing you a refund.

Q. How to cancel a demand draft?

Ans. Since you did not issue the DD directly, you cannot cancel a DD on your own. You need to visit the issuer bank and follow the procedure to cancel a DD if it has not been cleared. If you paid by cash, you need to submit the original DD, receipt of cash payment, and DD cancellation form to request cancellation of DD. You will receive a refund after the deduction of the cancellation charges levied by the bank.

If you made the payment using your bank account, you can submit the original DD and the cancellation form. The amount will be refunded to your bank account after deducting the cancellation charges.

Q. How to encash a demand draft?

Ans. It is not possible to encash a DD anymore. Banks have stopped paying a drawee in cash to avoid fraudulent transactions. If you are the payee, when your bank receives a DD, they will make the payment to your bank account only.

Q. What to do if the DD expires before I encash it?

Ans. Demand drafts have a validity period of 3 months from the date of issue (printed on DD). If it is not presented within its validity period, the DD becomes invalid. However, the amount is not refunded to the drawer automatically even if he made a payment from his bank account. Only the drawer can submit the application to the issuing bank for the revalidation of the DD. The issuing bank will verify the records and details before revalidating the DD for another 3 months. If the revalidated DD is not presented, it cannot be revalidated again.

Q. Is a fee charged from payee at the time of encashment?

Ans. No, no fee is charged from the payee at the time of encashment by the bank.

If you lose your DD, you need to sign an Indemnity Bond in stamp paper for the issuing bank. A copy can be helpful to present when you visit the bank. The bank will take some time to process the payment. Some banks clear payments for lost demand drafts in one week while others wait until the expiry date of the DD. In any case, they will deduct charges before issuing you a refund.

Q. What to do if the DD expires before I encash it?

Ans. Demand drafts have a validity period of 3 months from the date of issue (printed on DD). If it is not presented within its validity period, the DD becomes invalid. However, the amount is not refunded to the drawer automatically even if he made a payment from his bank account. Only the drawer can submit the application to the issuing bank for the revalidation of the DD. The issuing bank will verify the records and details before revalidating the DD for another 3 months. If the revalidated DD is not presented, it cannot be revalidated again.