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Scheduled banks are listed under the RBI Act. They have to meet financial norms. This makes scheduled banks more reliable. On the hand non-scheduled banks are not listed. They do not have to follow as rules.  

Have you ever thought about what makes one bank better than another bank? Why are some banks called scheduled banks and others are called scheduled banks? This is a question that a lot of people ask. They ask this question when they want to open a bank account or when they want to apply for a loan from a bank. 
 
People and businesses need to know the difference between scheduled banks and non-scheduled banks. This helps them choose the scheduled bank or the right non-scheduled bank to work with.  

Understanding the difference between these two types of banks scheduled banks and non-scheduled banks is very important. 

What are Scheduled Banks? 

A scheduled bank in India is a commercial bank that is included in the Second Schedule of the Reserve Bank of India (RBI) Act of 1934. To make it to this official schedule, banks have to meet certain RBI criteria related to: 

• Minimum paid-up capital and cash reserves 

• Limits on non-performing assets 

• Consistent profitability 

The key features that scheduled banks receive are: 

• They must maintain a paid-up capital and reserves of a specific amount  

• The RBI regulates its cash reserves, liquid assets, and overall functioning 

• They can access special refinancing facilities and loans from the RBI at set bank rates 

• They have access to local and national clearing houses for check processing and settlement 

Some major examples of scheduled banks in India include large public sector banks like the State Bank of India, major private Indian banks like ICICI and HDFC, and prominent foreign banks operating in India like HSBC and Citibank. According to the latest data, the RBI recognises over 130 scheduled commercial banks across the country. 

The scheduled bank status indicates that the bank meets key RBI regulations for stability and offers certain standardised services to customers in return, as per central banking guidelines. 

What are Non-Scheduled Banks? 

A non-scheduled bank in India refers to a financial institution that is not listed in the Second Schedule of the RBI Act, 1934. These banks do not meet all the criteria set by the RBI to be classified as scheduled commercial banks. 

Key features of non–scheduled banks: 

• Have less paid-up capital and cash reserves compared to scheduled banks 

• Not subject to strict control by the RBI 

• No access to refinancing facilities from the RBI 

• Cannot access the clearing house facilities easily 

Smaller private banks, cooperative banks, regional rural banks, and others are some of the non-scheduled banks examples in India. 

Key Differences between Scheduled and Non-Scheduled Banks 

The table below shows the differences between scheduled banks and non-scheduled banks, in India. It talks about how the Reserve Bank of India controls and regulates these banks. 

Factor	Scheduled Banks	Non-Scheduled Banks
Listing Status	Listed in the second schedule of the Reserve Bank of India Act 1934	Not listed in the second schedule of the Reserve Bank of India Act 1934
Definition	Banks that are officially registered with a paid-up capital exceeding Rs. five lakhs	No mandatory paid-up capital requirement for non-scheduled banks
Cash Reserve Ratio (CRR)	Maintains CRR with the Reserve Bank of India	Keeps CRR within its own institution
Loan Access	Authorised to borrow from the Reserve Bank of India	Can borrow from the Reserve Bank only in case of an emergency
Risk Level	Considered safer; typically not harmful to depositors	Seen as more risky and potentially harmful to depositor interests
Reporting Obligations	Must regularly submit reports to the Reserve Bank of India	Not obligated to submit reports to the Reserve Bank
Membership in Clearinghouses	Automatically eligible for clearinghouse membership	Not eligible for clearinghouse membership

Scheduled banks and non-scheduled banks are also different when it comes to getting help from the Reserve Bank of India. Scheduled banks can get this help by just following a few rules. They can lend money to sectors as they have to keep an amount of money in reserve. Scheduled banks can use facilities from the Reserve Bank of India. Scheduled banks get benefits because they follow these rules. 

List of Scheduled Banks and Non-Scheduled Banks 

Here’s a simple representation of Scheduled Banks vs Non-Scheduled Banks: 

Aspect	Scheduled Banks	Non-Scheduled Banks
Definition	Banks listed in the Second Schedule of the RBI Act, 1934	Banks not listed in the Second Schedule of the RBI Act, 1934
Regulation	Fully regulated by the Reserve Bank of India (RBI)	Less strictly regulated by RBI
Minimum Paid-up Capital	Must have a minimum paid-up capital and reserves of ₹5 lakh or more	May not meet the minimum capital requirement
CRR Requirement	Required to maintain Cash Reserve Ratio (CRR) with RBI	Not required to maintain CRR with RBI
Borrowing from RBI	Eligible for loans and financial assistance from RBI	Not eligible for RBI refinance facilities
Credibility	Considered more reliable and stable	Considered less stable compared to scheduled banks
Examples	SBI, HDFC Bank, ICICI Bank, PNB	Local area banks, small cooperative banks (not in schedule)

Type of Bank	Description	Examples
Public Sector Banks (PSBs)	Majority stake held by the Government of India; focus on financial inclusion and large-scale lending	SBI, Punjab National Bank, Bank of Baroda
Private Sector Banks	Majority ownership held by private entities; known for innovation, customer service, and tech-driven banking	HDFC Bank, ICICI Bank, Axis Bank
Foreign Banks	Banks headquartered outside India but operating branches within India	Citibank, HSBC, Standard Chartered
Regional Rural Banks (RRBs)	Established to serve rural areas with basic banking and credit facilities; jointly owned by Govt. of India, State Govt., and sponsor bank	Prathama Bank, Baroda UP Bank
Cooperative Banks (Scheduled)	Operate on cooperative principles; serve specific communities or regions; some qualify as scheduled if they meet RBI criteria	Saraswat Cooperative Bank, Cosmos Bank
Small Finance Banks (SFBs)	Focus on financial inclusion—serving small borrowers, MSMEs, and underserved segments	Ujjivan SFB, Equitas SFB
Payments Banks	Limited banking services—accept deposits and facilitate payments, but cannot lend	Paytm Payments Bank, Airtel Payments Bank

 
Considerations Before Choosing Between Scheduled and Non-Scheduled Banks 

Listed below are some key things that you should take into consideration while choosing between the banks: 

• Regulatory Oversight 

• Scheduled banks are regulated more strictly by the RBI. 

• Non-scheduled banks have comparatively lower regulatory requirements. 

• Financial Stability 

• Scheduled banks are generally more stable due to compliance with RBI norms. 

• Non-scheduled banks may carry higher risk due to fewer safeguards. 

• Access to RBI Facilities 

• Scheduled banks can borrow from the RBI and access clearinghouse facilities. 

• Non-scheduled banks do not have access to these privileges. 

• Credibility & Trust 

• Scheduled banks enjoy higher public trust and credibility. 

• Non-scheduled banks may be perceived as less reliable. 

• Size and Scale of Operations 

• Scheduled banks usually operate on a larger scale with wider reach. 

• Non-scheduled banks are often smaller and regionally focused. 

• Services and Offerings 

• Scheduled banks offer a broader range of financial products and services. 

• Non-scheduled banks may have limited offerings. 

• Risk Factor 

• Lower risk associated with scheduled banks. 

• Higher potential risk with non-scheduled banks due to limited oversight. 

• Customer Convenience 

• Scheduled banks typically have better infrastructure (branches, ATMs, digital services). 

• Non-scheduled banks may have limited accessibility and technology support. 

Scheduled Bank vs Non-Scheduled Banks: Which Should You Choose? 

When you are trying to decide between scheduled banks and non-scheduled banks, the main difference is how reliable they are and what rules they have to follow. Scheduled banks are on a list that the Reserve Bank of India keeps and they have to do what the Reserve Bank of India says, which makes them more secure and trustworthy. That is why they are better, for most people. They can also get help from the Reserve Bank of India when they are having money problems. Non-scheduled banks are smaller and do not have many rules so they might not be as stable and might not be able to do as much for you. For people and companies, scheduled banks are the better choice because they are safer and you can count on them. 

Conclusion 

Choosing the right bank isn’t just about big names or interest rates — it’s about knowing how they operate. The difference between scheduled and non-scheduled banks reflects their financial strength and the services they can offer you. 

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FAQs on Scheduled and Non-Scheduled Banks 

Why are some banks classified as Scheduled Banks while others are not? 

In India the Reserve Bank of India checks if a bank is doing things the way. The Reserve Bank of India looks at things like if the bank has money if the bank is keeping some cash aside if the bank is making money regularly and if the bank is being honest about its finances. If the bank does all these things the Reserve Bank of India puts the bank on a list, which is part of the Reserve Bank of India Act from 1934 and the bank is called a Scheduled Bank. These Scheduled Banks get some advantages and the Reserve Bank of India keeps an eye on them. The Reserve Bank of India checks the Scheduled Banks regularly. 

Banks that do not do all these things are called Non-Scheduled Banks. The Non-Scheduled Banks do not get many advantages and the Reserve Bank of India does not watch them as closely. The Reserve Bank of India has rules, for Non-Scheduled Banks. 

Who decides whether a bank is Scheduled or Non-Scheduled? 

The Reserve Bank of India (RBI) is the one that decides this. It regularly checks how banks are performing and whether they meet the required rules, like having enough capital, keeping proper cash reserves, and following other guidelines. 

Are all nationalised banks scheduled banks? 

Yes, all nationalised banks are listed as scheduled banks since they meet RBI criteria and are included in the Second Schedule of the RBI Act. 

Do scheduled and non-scheduled banks get the same RBI benefits? 

No, scheduled banks get more privileges like access to RBI refinancing, clearinghouse facilities, and greater credibility compared to non-scheduled banks. 

Can non-scheduled banks borrow from RBI? 

Generally no, non-scheduled banks do not have routine access to RBI borrowing facilities, unlike scheduled banks. 

A PAN card is a unique ID given by the Income Tax Department that helps track your financial activity in one place. You might have seen messages asking you to link your PAN with your bank account. This is required, as it basically connects your income, taxes and major transactions to a single record. So if you have not done it yet, it is best to complete it at the earliest to avoid any issues later.

Read on to know why it is important and how to link PAN to bank account through various methods — online, phone banking, mobile app, ATM or by visiting your bank branch.

Why Link PAN to Bank Account?

Here are some key reasons why it is important to complete the bank account and PAN card link:

• It’s the law: For certain types of accounts and big financial transactions (like large deposits or investments), the government has made it mandatory to link your PAN. If you don’t, your bank might put limits on what you can do or even charge penalties.
• It keeps your taxes in check: Linking your PAN helps the Income Tax Department track your transactions and match them with your income tax returns. It’s a smart way to stay compliant and avoid trouble later.
• It’s easier for banks to verify you: When your PAN is linked, banks can quickly verify your identity and address, without asking for extra paperwork every time you open an account or update your details.
• No more carrying around your PAN card: Once linked, you won’t need to provide a photocopy of your PAN card every time you want to invest, open a new account or do other financial stuff. Everything’s already synced.

Step-by-Step Guide to Link PAN to Bank Account

Below is a detailed step-by-step guide to help you link your PAN card with your bank account through various methods such as net banking, mobile banking app, phone banking, ATM or by visiting the bank branch. Carefully go through the instructions for the specific method you wish to use.

1. Through Internet Banking

Follow these steps to link PAN to bank account through net banking:

• Step 1: Open your bank’s Internet banking portal and log in using your credentials
• Step 2: Go to your Profile or Personal Information section
• Step3:Look for menu options like PAN Updation/Linking/Seeding/Registration. Click on the relevant option.
• Step 4: Enter your PAN card number and other details like DOB.
• Step 5: Submit the details. PAN-account linking will be completed within 2-7 working days.
  

2. Through Phone Banking

To link your PAN card with a bank account via phone banking, follow these steps:

• Step 1: Call your bank’s customer care number
• Step 2: Select relevant options to get directed to an executive
• Step 3: Request the executive to link your PAN to the account
• Step 4: Provide accurate PAN details along with verification information
• Step 5: Note down the confirmation/reference number received
  

3. Through the Mobile Banking App

To link PAN with bank account using a mobile app can be done easily by:

• Step 1: Open your bank’s mobile app and go to Profile/e-Services section
• Step 2: Choose the “Link PAN” or “Update PAN” option
• Step 3: Enter the requested information, such as PAN, account holder name, DOB, etc.
• Step 4: Submit the details after carefully verifying
• Step 5: Authorisation using OTP
• Step 6: Confirmation message on successful linking
  

4. Through ATM

Follow the steps below to link your PAN card with your bank account via ATM:

• Step 1: Visit the nearest ATM of your bank
• Step 2: Insert your ATM/debit card and enter your PIN
• Step 3: Go to the “Service Request” or “Account Services” section
• Step 4: Select the “Link/Update PAN Card” option
• Step 5: Input PAN card details accurately
• Step 6: Take note of the reference number displayed on the ATM screen
  

5. Offline at Bank Branch

To link your PAN card with the account offline, here is the process:

• Step 1: Visit the home branch where your account is maintained
• Step 2: Ask for the PAN Linking/Updation form and fill in the details
• Step 3: Submit the form with a self-attested PAN card copy
• Step 4: You may need to submit a letter to the Branch Manager requesting PAN updating

For Which Accounts PAN is Mandatory?

Linking your PAN card is mandatory for certain financial accounts as per government regulations. Typically, PAN linkage is required for:

• Savings Accounts
• Current & Cash Credit Accounts
• Fixed and Recurring Deposit Accounts
• Demat Accounts
• Credit Card Applications

Benefits of Updating Your PAN Details on Bank Account

Updating your PAN details with your bank account comes with a few practical benefits that make managing your finances easier.

• Better compliance: Linking your PAN helps you stay in line with tax rules and avoids any penalties or restrictions
• Smooth transactions: It ensures your high-value transactions go through without any delays or issues
• Faster verification: Your bank can verify your details quickly, making updates and applications easier
• Easy tax tracking: Your transactions stay linked to your PAN, which makes filing taxes simpler
• Less paperwork: You do not have to submit your PAN again and again for different banking needs

Documents Required to Link PAN with Bank Account

Linking your PAN with your bank account usually requires only a few basic documents:

• PAN card copy: A self-attested copy of your PAN card is required to verify your PAN details
• Identity proof: In some cases, you may need to show a valid ID proof such as an Aadhaar card, a passport or a driving licence
• Bank account details: Your account number and related details are needed to complete the linking request
• PAN linking form: If you are visiting a branch, you may need to fill out and submit a PAN updation or linking form provided by the bank

[Source: Link PAN with Bank Accounts – ClearTax]

Conclusion

Linking your PAN card with your bank account is a simple process that can be quickly completed through multiple channels such as net banking, mobile/phone banking, ATM or bank branch visits. This linking helps maintain seamless financial transactions and tax compliance as per Indian income tax laws.

PAN also acts as an important document while applying for a quick loan. With Fibe, you can get up to ₹10 lakhs with flexible repayment options. Fibe makes sure you get the funds you need without any hassle. Visit the website or download the Fibe App today to explore more!

FAQs on Linking PAN Card with Bank Account 

Is it possible to link my PAN to my bank account online?

Yes, most banks provide the facility to link your PAN to your bank account easily through net banking. Simply log in to your account, go to the profile/personal details section and look for the ‘Link PAN’ option. Submit your PAN details along with verification information to complete the linking online.

How to check PAN card link with bank account?

You can check your bank account statement or net banking profile or request your bank to provide an account linkage status letter/SMS confirmation. If the linkage is successfully completed and seeded with your customer ID, it will have an updated PAN linking status.

What happens if I do not link my PAN Card to my bank account?

As per income tax guidelines, not linking your PAN with certain financial accounts can lead to restrictions in transactions, including cash deposits and withdrawals beyond a limit. You may also be liable for penalties for non-compliance if PAN is mandatory for your account type.

I have two bank accounts in a bank. Do I have to link both with my PAN Card?

Yes, your PAN card should be linked to all your operative bank accounts, including multiple savings accounts, current accounts, cash credit accounts, etc. This linking helps banks verify your KYC details seamlessly across all your accounts and allows smooth transactions.

Can I link my PAN card with a bank account offline?

Yes, you can link your PAN offline through phone banking or by visiting your bank branch. You may need to fill out a KYC form and provide your PAN details for verification.

How long does it take to link a PAN with a bank account?

The time depends on the method you choose. Online methods can be instant or take up to 24 hours, phone banking may take up to 2 days. Branch requests usually take 1 to 3 working days.

Need a safe place to store your valuables? A bank locker facility is the perfect solution. It offers a secure, protected space within the bank designed to store everything from important documents to precious jewellery. While most nationalised and private banks provide this service, the features and charges may vary. 

Read on to understand how you can rent a safe deposit locker, access it and what you need to know about the charges involved.

Understanding Bank Locker Facility

A bank locker facility is more than just a storage solution – it’s a high-security service provided by financial institutions to keep your valuable items safe. These lockers are located within the secure premises of the bank, giving you peace of mind knowing that your possessions are protected from theft, natural calamities or even accidents at home.

You can use a bank locker to store a wide range of items, such as:

• Important documents: Property papers, legal documents and certificates
• Jewels: Family heirlooms, gold, and other precious items
• Valuable collectables: Artwork, antiques or other precious items you want to keep safe

Eligibility Criteria for Getting a Bank Locker

Banks usually have specific eligibility criteria for renting a safe deposit locker:

• You must have a functioning savings/current account with the bank for a minimum period, often 6 months to 1 year.
• Some banks require you to maintain an average monthly balance in your accounts.
• If you do not have an existing account, you may need to open a fixed deposit account to establish a financial relationship for locker eligibility.
• A loan or other banking relationship may improve the priority of locker allocation.

Those eligible to open a safe deposit locker at banks typically include individual citizens, companies and organisations: 

• Individual applicants can apply for a personal locker independently or jointly with another account holder, such as a spouse or family member. 
• Incorporated entities like limited companies and firms can also utilise locker facilities for secure storage needs. 
• Additionally, banks permit non-resident Indian citizens to rent lockers if they already have an existing locker relationship from previous periods of residency. 

The required documentation and process may vary between different banks. Still, the locker system broadly aims to be accessible for both personal and business storage purposes, only needing association through relevant accounts.

Locker Booking Process

Once you’ve met the basic requirements to rent a safe deposit locker, your next step is to check if there are any lockers available at your preferred bank.

• Choose from different locker sizes – small, medium, or large – based on your storage needs.
• Pay a refundable security deposit and advance rent after selecting the locker.
• Sign an agreement outlining the terms and conditions of locker usage.
• The bank records your signature for verification whenever you access the locker.
  

Accessing and Operating the Locker

When you’re ready to access your safe deposit locker, just head over to the bank during its operating hours and hand over the locker key. After a quick verification, a bank officer will accompany you to the locker area to ensure everything stays secure. This two-key system ensures that only you (and the bank) can access your locker. 

Locker Related Charges

Here’s a quick and easy breakdown of the bank locker charges you may need to pay when renting a safe deposit locker from a financial institution:

• Refundable security deposit: Paid upfront when you book the locker.
• Annual rent: Varies depending on the size of the locker – larger lockers have a higher bank locker price.
• Locker breaking charges: In case you lose the key, the bank may charge you to break open the locker.
• Late payment fee: A penalty is applied if you don’t pay your locker rent on time.
• Extra access charges: Most banks allow a limited number of visits. Additional visits may cost extra.

Typically, the bank locker price ranges between ₹1,500 to ₹12,000 or more annually. The cost depends on:

• The bank (public sector banks generally offer lower bank locker charges than private ones)
• The size of the locker
• How often do you access your safe deposit locker
• Any additional services provided

Banks may also charge GST and fees for locker-breaking or late payments. Comparing options across banks helps you find the best locker that fits your needs and budget.

Conclusion

At the end of the day, having a safe deposit locker is about more than just storing valuables — it’s about peace of mind. Whether it’s your family heirlooms, important documents, or other prized possessions, knowing they’re stored safely in a high-security environment brings a sense of comfort that’s hard to put a price on.

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FAQs

Who is eligible to apply for a bank locker?

Both individuals and entities, like companies and trusts, can apply for a bank locker. Individuals can open personal lockers singly or jointly. Banks typically require applicants to have an existing savings account, fixed deposit, loan or other affiliation with the bank for a defined period.

Can I access my bank locker anytime?

No, locker access is provided only during banking hours on working days. Locker holders must also provide key verification to access lockers.

What happens to my locker if I don’t use it for a long time?

If you don’t use your locker for a very long time, the bank may take action, even if you are still paying the rent. First, the bank will try to contact you several times. If they don’t get a response, they have the right to open the locker. The items inside will be checked, listed, and either given to the person you’ve nominated or handled as per the rules. So, if a locker stays unused for too long, the bank can cancel it and take further steps.

What happens if I fail to pay my locker rent on time?

If you don’t pay your locker rent on time, the bank will charge a late fee. If the rent stays unpaid for a long time, the bank will try to contact you multiple times. If there’s still no response, the bank can break open the locker. The items inside may be sold through an auction to recover the unpaid rent and other charges. In such cases, the bank can also cancel your locker agreement.

Online transactions are now the new norm. This is particularly so for younger generations who are technologically savvy. Nevertheless, paper-based transactions such as cash deposits remain a common banking practice. Cash deposit slips must be completed when you make a physical cash deposit into an account. It is for this reason that you should know what a banking deposit slip is. 

Read on to learn what bank deposit slip is, how it functions and how to complete one accurately.

What is a Bank Deposit Slip?

A bank deposit slip is essentially a paper-based form. This form is provided by banks when you need to deposit money into your account. The form has blank spaces to fill in details like your name, account number, amount to be deposited, date and denomination breakdown. All you have to do is fill out the form correctly and hand it to the bank employee along with the cash. They will then verify the information and credit the required amount to your account. Filling deposit slip basically acts as a formal record of your deposit.

What is a Deposit Ticket?

A deposit ticket is another term for a deposit slip. Both refer to the form you fill out when depositing cash or cheques into a bank account. The term ‘deposit ticket’ is not commonly used by all banks. However, it is an important part of the cash deposit process.

The format for these slips may vary slightly with each bank. However, most of the key fields remain the same. 

Here’s an example of deposit slip:

Date: 11/04/2025
Depositor’s Name: Rohan Mehta
Account Number: 123456789012
Type of Deposit: Cash
Amount: ₹10,000
Denomination Breakdown:

• ₹500 × 10 = ₹5,000
• ₹200 × 10 = ₹2,000
• ₹100 × 30 = ₹3,000

Signature: Rohan Mehta

These deposit slips also have a section for the bank to stamp once the transaction is completed. Banks also keep pre-filled sample deposit slips at all branches for reference. 

Why Is a Deposit Slip Important?

A deposit slip serves 3 purposes:

• It records the details of your cash deposit
• It helps the bank verify the amount and process your transaction
• It gives you a stamped copy as proof of deposit

You might use a deposit slip for different reasons. It could be to add money to your savings account, pay off a loan or top up a fixed deposit. Filling it correctly makes sure your money reaches the right place.

How to Fill Bank Deposit Slip?

Let’s walk through how to fill bank deposit slip in a few simple steps:

1. Pick up the deposit slip from your bank branch counter
2. Write your name clearly in the space provided
3. Enter the account number where you want the money deposited
4. Write the date of the deposit
5. Mention the deposit amount in both words and numbers
6. Add denomination details (like how many notes of ₹500, ₹100, etc). If you’re filling deposit slip for a cheque deposit, mention the cheque number and bank name
7. Sign the slip at the bottom
8. Tear off the customer copy and give the rest, along with the cash, to the bank staff

Please make a note: Do carry your PAN details if you’re depositing over ₹50,000 in cash. 

Benefits of Deposit Slips

For banks, they’re a way to track all cash and cheque deposits made during the day. This helps keep records accurate and reduces manual errors. 

For customers, a deposit slip is like a receipt. It shows the bank received your money and added it to the right account. If there ever is a mistake, you can use the slip to raise a query. Because it contains information such as denominations and not simply the amount, it provides much more clarity.

The Bottom Line

Completing a banking deposit slip is an everyday process and is important in ensuring that your money goes into the bank safely. It helps the bank process your transaction without delays and gives you a written record. Whether you’re depositing money into your own account or someone else’s, taking a minute to double-check the details can save you trouble later.

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FAQs on Deposit Slips

1. Should I list each currency note separately or just the total amount?

It’s better to list each denomination separately. It enables the bank to instantly verify the cash. It even avoids problems in case of any discrepancy later.

2. Can I fill out a deposit slip for someone else?

Yes, absolutely. You can easily complete a deposit slip for someone else. You simply need to make sure that you fill out the correct account number and other details.

There are several ways to make payments in India, like using cash, cards or bank transfers. Among them, cheques and demand drafts (DD) are still widely used for paper-based transactions. Each serves a different purpose and works in its own way. 

Understanding the difference between cheque and DD can help you decide which one to use, depending on the situation. Read on to learn more.

What Is a Cheque?

A cheque is a written instruction given by an account holder to their bank. It instructs the bank to pay a specific amount to a person or organisation. The payment is processed when there is enough balance in the account and the cheque is duly signed. You can use cheques to pay bills, transfer money or make purchases.

Types of Cheques

There are different types of cheques depending on their use:

• Bearer cheque: Can be encashed by anyone who presents it at the bank. No identification is needed.
• Order cheque: Only the person whose name is written on the cheque can withdraw the money.
• Crossed cheque: Cannot be cashed directly. It must be deposited into the payee’s bank account.
• Post-dated cheque: Written with a future date and can only be used on or after that date.

Each type has its own use, so you can choose the one that fits your needs best.

What Is a Demand Draft?

A Demand Draft (DD) is a prepaid financial instrument issued by a bank. You give the bank the amount in advance, and they issue a draft payable to a specific person or institution. Because the bank takes the money upfront, demand drafts are considered more secure. They’re often used for high-value transactions like school admissions, government fees or tender deposits.

Types of Demand Drafts

Here are some common types of DDs:

• Sight draft: Payment is made only after the required documents are checked and approved by the bank.
• Time draft: The payment is scheduled for a future date. It can only be claimed after that date arrives.

You can opt for a DD when you need a guaranteed payment.

Cheque vs Demand Draft

Here’s a quick look at the difference between cheque and DD:

Feature	Cheque	Demand Draft
Issued by	A cheque is issued by the account holder	A demand draft is issued by the bank
Account balance required	Requires sufficient balance in the account	No balance is needed as the amount is paid in advance
Risk of failure	Can bounce if there’s insufficient balance	No risk of bouncing as it’s prepaid
Cancellation option	Can be cancelled by the issuer before payment	Cannot be cancelled once the bank initiates the payment
Issuance fee	Usually issued free of charge	A fee is charged by the bank for issuing a demand draft
Payment mode	Can be deposited or withdrawn at your bank branch	Can be collected from any branch of the issuing bank
Security	Carries higher risk if lost or stolen	More secure as the bank holds and processes the funds

This difference between cheque and DD affects their primary usage. Most people prefer cheques for everyday use and demand drafts for formal or guaranteed payments.

When Should You Use a Cheque or a Demand Draft?

Now that you’re clear on the cheque and DD difference, you’ll know exactly when to use each. 

You can use a cheque when:

• You’re paying someone you know and trust
• The amount is not very high
• You need the option to stop or cancel the payment if needed

Use a demand draft when:

• The receiver requires guaranteed payment
• You’re paying an institution or making a formal deposit
• You don’t want to risk insufficient balance issues

Understanding the difference between demand draft and cheque can help you make smarter financial choices. And if you’re looking for an easy way to manage your everyday expenses, the Fibe Axis Bank Credit Card — India’s first numberless credit card fits right in. 

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FAQs on Cheque vs Demand Draft

Can you use both cheques and demand drafts for payments?

Yes, both can be used based on your needs. In the cheque vs demand draft comparison, cheques are good for everyday use. Demand drafts are better for secure or formal payments.

Which instrument offers more security, a cheque or a demand draft?

Demand drafts are more secure since they’re prepaid and issued directly by the bank. Cheques, on the other hand, can bounce if there isn’t enough balance in the issuer’s account.

Do cheques and demand drafts need clearing time?

Yes, both require clearing time. For cheques, it depends on the bank’s process. DDs are usually cleared faster since the funds are already with the bank.

Can you get a demand draft without having a cheque?

Yes, you can get a demand draft without a chequebook. You can pay for it using cash or directly through your bank account.