Banker’s Cheque vs Demand Draft: Key Differences Explained
Banker’s Cheque is a cheque drawn by the bank itself on its own funds; a Demand Draft is a prepaid instrument where one bank issues a payment order to another bank, payable to the third party.
People confuse them because both are pre-paid and feel safer than personal cheques. Yet the mix-up happens at the counter when urgency and unfamiliar jargon collide—customers hear “DD” or “BC” and simply nod, hoping the clerk picks the right slip.
Key Differences
Banker’s Cheque is non-negotiable after issue, payable only in the same city, and never expires. Demand Draft can be revalidated, payable anywhere in India, and is cancelled through a formal refund process.
Which One Should You Choose?
Need local, same-day settlement with zero risk? Pick Banker’s Cheque. Sending money to another city or paying exam fees? Demand Draft travels safely by mail or courier and is accepted nationwide.
Examples and Daily Life
College admissions: DD to the university in Pune. Buying a second-hand bike: Banker’s Cheque in Bangalore. Property token: DD for the seller’s bank. Simple rule—match the payee’s location to the instrument.
Can I stop payment on either?
Banker’s Cheque: No, once issued it’s irrevocable. Demand Draft: Yes, but only through a formal cancellation request with the original draft surrendered.
Is there a fee difference?
Both carry flat charges—usually ₹20–200—set by the issuing bank. DDs sent to distant cities sometimes cost slightly more due to postage or courier.
Do they expire?
Banker’s Cheque has no expiry. A Demand Draft is valid for three months; you can get it revalidated later without paying the full amount again.