A Demand Draft is a prepaid bank instrument guaranteeing payment of a specified amount to a named beneficiary. Key highlights:
- Funds are collected upfront, ensuring zero risk of bounce.
- No signature required for encashment, making it highly secure.
- Can be issued even if the drawer doesn’t bank with the issuing bank.
Types of DD:
- Sight DD: Payable immediately upon presentation.
- Time DD: Payable after a specified date.
How Does a Demand Draft Work?
- Submit a DD application—either online via net banking or in-person at the branch.
- Bank debits your account or accepts cash, then issues the draft.
- Beneficiary encashes or deposits the DD at their bank; the amount gets debited from the issuing branch.
- Valid for 3 months; after expiry, can be revalidated or refunded with bank approval.
How to Get a Demand Draft
Offline:
- Visit any branch and fill out the DD form.
- Pay the specified amount and applicable fees.
- Collect the printed Demand Draft.
Online:
- Log into your net banking → Services/Requests → Issue Demand Draft.
- Enter payee details, amount, issuing/paying branch, and delivery preferences (branch or courier).
Demand Draft Charges (Approx India-wide)
Charges vary by bank and the DD amount. Examples:
SBI:
- Up to ₹5,000: ₹25
- ₹5,001–₹10,000: ₹50
- ₹10,000–₹1 lakh: ₹5 per ₹1,000 (min ₹60)
- Above ₹1 lakh: ₹4 per ₹1,000 (min ₹600; max ₹2,000)
- Cancellation/duplicate DD: ₹200 + GST
General Bank Slabs:
- Up to ₹1 lakh: ₹100
- Above ₹1 lakh: 0.1% of DD amount (max ₹2,500)
- Additional courier or cash remittance fees may apply.
ICICI Bank:
- Nil up to ₹25,000; above that, ₹3 per ₹1,000 (min ₹75, max ₹15,000)
Note: From July 1, 2025, ICICI revised its DD charges along with other service fees.
Cancelling or Revalidating a DD
- Submit a written request at the issuing bank branch with the original DD and payment receipt.
- Cancellation fees apply (e.g. SBI charges up to ₹200 + GST; some banks may waive if amount ≤ ₹500).
- DD expired after 3 months? Revalidation or refund available upon bank approval (usually with small fee).
Pros & Cons of Demand Draft
Benefits:
- Trusted and guaranteed payment.
- No risk of insufficient funds—amount is prepaid.
- Accepted nationwide; suitable for large or formal payments (e.g. education, property).
Limitations:
- Processing takes a few days; slower than electronic transfers.
- Issuance and cancellation fees apply.
- Physical DD may get lost/stolen—must be reported immediately to issuing bank.
Quick Recap Table
| Step | Action |
|---|---|
| Choose DD Type | Sight (immediate) or Time (delayed payment) |
| Submit Request | Via net banking or at branch with payee and amount details |
| Pay & Issue | Bank deducts funds and prints DD; deliver or courier to payee |
| Use Validity | Use within 3 months or revalidate/refund with fee |
| Cancel if Needed | Submit request + DD + receipt; pay cancellation fee |
Pro Tips
- Double‑check payee name, amount (in figures & words), and paying branch code.
- For high‑value DDs, consider courier delivery for security.
- Keep a photocopy or photo—helps in cancelation if lost.
- Watch for July 2025 updates—some banks like ICICI have revised DD fee schedules.
Final Takeaway
A Demand Draft (DD) remains a reliable, bank-guaranteed payment tool—ideal when trust or receipt confirmation is needed. It’s widely accepted, safe, and especially useful for formal purchases or inter-bank transfers. Just remember to factor in issuance and cancellation fees, validate details carefully, and use within the validity period.
