Demand Draft

Full form: DD

Banking

A Demand Draft (DD) is a pre-paid payment instrument issued by a bank on behalf of a customer, guaranteeing payment to the named payee. Unlike cheques, DDs cannot bounce as the bank collects the money upfront before issuing the DD.

In detail

DD charges: Rs 25-200 depending on amount and bank. Payable at the destination branch of the issuing bank. Valid for 3 months from issue date.nnDDs are used for: college admissions and exam fees, government payments (passport, visa), court fee payments, insurance premium (some companies), cases where guaranteed payment is required and cheque is not trusted.nnIn the digital age, DDs are increasingly being replaced by RTGS/NEFT confirmations and UPI for most purposes. However, many government and educational institutions still mandate DDs.

Real-life example

🇮🇳 India example

Arun is applying for an MBA program. Application form requires a DD of Rs 2,000 payable to "University Name" at their city. He visits his bank, pays Rs 2,000 + Rs 50 DD charge = Rs 2,050. Gets DD. Cannot be misused -- only payable to named university.

Frequently asked questions

Can a DD be cancelled? ▼

Yes. The purchaser of the DD can request cancellation at the issuing bank. Original DD must be surrendered. Bank refunds the amount after deducting cancellation charges. Third parties cannot cancel a DD.