Demand Draft vs Bankers Cheque or Pay Order : Demand draft is a financial instrument issued by bank and used by people for transferring money from one place to another. Banker’s Cheque which is also known as pay order is an financial instrument issued by the bank containing an order to pay a specified sum to the specified person, in the same city.
For banker’s cheque as well as demand draft the validation period of is 3 months . It means that after the expiry of three months, the instrument is of no use. However Expiry Date of DD as well as Pay order can be extended by making renewal request to the bank .
Difference Between Demand Draft & Bankers Cheques ( Pay Order ) :
1. Demand draft is a negotiable instrument used to transfer money from one city to another person in another city favouring any person & Banker’s Cheque or Payment Order is a cheque issued by bank for making the payments within the same city.
2. All banker’s cheque are pre-printed with “NOT NEGOTIABLE”. Demand draft of Rs. 20000 or more should be issued with “A/c payee” crossing. Cash Payment of Rs. 20000 and above is not permissible for Demand Draft as well as Bankers Cheque .
3. Pay Order can not be paid by other branch. Demand Draft can be cleared at any branch of the same bank.
4. Bankers Cheque can not be drawn for payment by other banks . Demand Draft can be drawn at branch of other banks too only if their is tie up arrangement between banks .
Similarities between Demand Draft & Pay Order ( Bankers Cheques ) :
1. Both cannot be dishonored because bank has responsibility for payment.
2. Both are used for the payment for settling transactions.
3. Both are paid in advance by the customer.
4. Bank Charges Commission for issuance of Demand Draft as well as Pay order . However In most of the Banks Pay Order Charges are less in comparison to charges of Demand Draft .
5 .Both are used for the transfer of money.
6. Both have a validation period of 3 months.
7. Validation period can be extended for both by Bank .
8 . Both can be renewed by banks
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