A Demand Draft (DD) is a secure prepaid banking instrument used to transfer money to a person, business, institution or government body. It is commonly used for college fees, exam fees, application payments, property transactions, tender deposits and business payments where the receiver wants assured funds. Since the amount is paid to the bank before the DD is issued, there is almost no risk of the payment bouncing like a cheque.
This guide explains the DD full form, demand draft meaning, required details, charges, validity, types, process, cancellation, RBI-related rules and key differences between DD and cheque.
What is a Demand Draft (DD)?
The full form of DD is Demand Draft. It is a payment instrument issued by a bank after the payer deposits the amount in advance through cash, cheque or account debit. The bank then issues the DD in the name of the payee.
For example, if a student has to pay ₹75,000 as college admission fees, the college may ask for a DD instead of a cheque. This gives the college assurance that the payment is backed by the bank and will not bounce.
A DD is usually deposited by the payee into their bank account. Once processed, the amount is credited to the payee.
What Details Are Required for a Demand Draft?
To make a demand draft, you generally need the following details:
| Detail Required | Meaning |
|---|---|
| Payee name | Name of the person, company, college or authority receiving the payment |
| Amount | DD amount in figures and words |
| Payable location | City or branch where the DD is payable |
| Drawer details | Name and address of the person making the DD |
| Purpose of payment | Reason such as fees, deposit, tender or application payment |
| Payment mode | Cash, cheque or account debit |
| PAN details | Required for transactions of ₹50,000 or more |
| Signature | Signature of the person requesting the DD |
Always check the spelling of the payee name and amount before submitting the request.
Demand Draft Charges
Banks charge a small fee for issuing, cancelling or revalidating a demand draft. The fee depends on the bank, DD amount and mode of request.
| Bank | Indicative Demand Draft Charges |
|---|---|
| HDFC Bank | May start from around ₹75 per draft; higher amounts may be charged per ₹1,000 |
| ICICI Bank | May be free for small drafts; higher values may be charged per ₹1,000, subject to limits |
| SBI | Charges may start from ₹25 for small DDs and increase with the amount |
| PNB | Charges may vary for rural and urban branches; usually charged slab-wise |
| Axis Bank | May offer limited free DDs for select accounts; higher amounts may attract charges |
| HSBC | Charges may start from around ₹100 and vary by amount |
| Bank of Baroda | Charges may start from around ₹50 and increase based on value |
Note: These charges are indicative. Banks revise fees from time to time, so always check the latest schedule of charges on your bank’s official website or at the branch.
Demand Draft Validity
A demand draft is generally valid for 3 months from the date of issue. If it is not presented within this period, it becomes invalid for payment.
However, the money does not disappear. The person who made the DD can request the issuing bank to revalidate it. Once approved, the DD may be valid for another 3 months. A revalidated DD usually cannot be renewed again after the extended period. Some banks may charge a small revalidation fee.
Types of Demand Draft
There are two main types of demand drafts:
1. Sight Demand Draft
A sight demand draft is payable when it is presented to the bank with the required documents. After verification, the bank processes the payment. It is useful when payment needs to be made quickly after document checks.
2. Time Demand Draft
A time demand draft is payable only after a specific date or period mentioned on it. It is commonly used in business transactions where the payment is scheduled for a future date.
Features of a Demand Draft
Key features of a DD include:
- Prepaid instrument: The amount is paid to the bank before issue.
- Low bounce risk: Since the bank already has the funds, it does not bounce like a cheque.
- Payee-specific: It is issued in the name of a specific person or organisation.
- Fixed amount: The amount cannot be changed after issue.
- Widely accepted: Used by colleges, businesses, government bodies and institutions.
- Useful for large payments: Suitable for formal and high-value transactions.
- Can be cancelled if unused: Cancellation is possible if the DD is not deposited or cleared.
How to Make Demand Draft Offline?
You can make a demand draft by visiting a bank branch.
Step 1: Visit your bank branch.
Step 2: Ask for a demand draft application form.
Step 3: Fill in details such as payee name, amount, payable city and purpose.
Step 4: Submit the form with valid ID proof if required.
Step 5: Pay the DD amount and bank charges through cash, cheque or account debit.
Step 6: Provide PAN if the amount is ₹50,000 or more.
Step 7: Collect the DD and verify the payee name, amount and date.
Keep the receipt safely for tracking, cancellation or revalidation.
How to Fill Demand Draft Form Online?
Many banks allow DD requests through internet banking or mobile banking.
Step 1: Log in to your bank’s net banking or mobile banking account.
Step 2: Go to Requests, Service Requests or Issue Demand Draft.
Step 3: Select the account from which the amount will be debited.
Step 4: Enter payee name, amount, payable location and purpose.
Step 5: Choose delivery mode, such as courier or branch pickup.
Step 6: Review all details carefully.
Step 7: Submit the request and note the reference number.
Online DD requests are convenient, but delivery or pickup timelines may vary by bank.
How to Use a Demand Draft
- Submit it to a college or university for education fees.
- Attach it with government forms or applications.
- Use it for property-related payments or deposits.
- Submit it for tenders, security deposits or business payments.
- Deposit a received DD into your bank account for credit.
- Keep an acknowledgement or receipt after handing over the DD.
How to Cancel a Demand Draft?
A DD can usually be cancelled only if it has not been deposited or cleared by the payee.
Step 1: Visit the issuing bank branch.
Step 2: Carry valid ID proof and the original DD.
Step 3: Fill out the DD cancellation form.
Step 4: Mention DD number, amount, issue date, payee name and reason.
Step 5: Pay applicable cancellation charges.
Step 6: The bank verifies the DD status and refunds the amount after deductions.
Sample Demand Draft Cancellation Letter
To
The Branch Manager
[Bank Name]
[Branch Address]
Subject: Request for Cancellation of Demand Draft
Dear Sir/Madam,
I request you to cancel the demand draft issued from my account. The details are given below:
| Particular | Details |
|---|---|
| DD Number | [Enter DD number] |
| Amount | [Enter amount] |
| Issue Date | [Enter date] |
| Payee Name | [Enter payee name] |
| Account Number | [Enter account number] |
The demand draft has not been delivered to or deposited by the payee. Kindly cancel the same and refund the amount to my account after deducting applicable charges.
Yours faithfully,
[Your Name]
[Contact Number]
[Signature]
RBI Guidelines for DD in Cash
Important banking rules related to DDs include:
- Demand drafts of ₹50,000 or more are generally not issued against cash.
- High-value DDs are usually issued through account debit, cheque or other traceable banking modes.
- PAN details are required for DDs of ₹50,000 or above.
- A DD is generally valid for 3 months from the issue date.
- Expired DDs can be revalidated by the issuing bank on request.
- A DD is usually credited to the payee’s bank account and not treated like direct cash withdrawal.
These rules help make high-value transactions safer and more traceable.
Demand Draft vs Cheque: Key Differences
A demand draft and cheque are both used for payments, but they are not the same. A cheque is issued by an account holder and may bounce if there is insufficient balance. A demand draft is issued by the bank after collecting the money in advance, making it more secure for the receiver.
| Difference | Demand Draft | Cheque |
|---|---|---|
| Issued by | Bank | Account holder |
| Payment assurance | High | Depends on account balance |
| Bounce risk | Very low | Possible |
| Best for | Fees, deposits, official payments | Regular payments |
| Security | More secure | Comparatively less secure |
| Payment basis | Prepaid | Paid when presented |
Advantages of Demand Draft
- Offers assured payment to the payee.
- Does not bounce due to insufficient funds.
- Useful for official and high-value payments.
- Accepted by colleges, government bodies and businesses.
- Does not always require the receiver’s account number.
- Provides proof of payment through DD receipt.
- Can be cancelled or revalidated if not used within the allowed period.
Conclusion
A demand draft is a safe and reliable payment option for formal transactions. It is especially useful when the receiver wants guaranteed funds, such as for college fees, government applications, property payments, tender deposits and business transactions. Since the amount is paid in advance to the bank, a DD offers better payment assurance than a cheque.
Before making a DD, always verify the payee name, amount, payable location, validity and bank charges. This helps avoid rejection, cancellation or delays.
Need urgent funds before making an important payment? With Fibe’s Instant Personal Loan, eligible users can access funds online through a quick digital process, subject to approval and eligibility.
FAQs on Demand Draft
1. What is DD in bank?
DD means Demand Draft. It is a prepaid banking instrument issued by a bank to make secure payments.
2. How do you make a demand draft?
You can make a DD by visiting a bank branch or using internet banking. Fill in the payee name, amount, payable city and purpose, then pay the amount and charges.
3. Can a demand draft be made online?
Yes, many banks allow DD requests through net banking or mobile banking. You can choose branch pickup or courier delivery depending on the bank.
4. How do you make a DD with cash?
You can visit a branch, fill the DD form and submit cash. For DDs of ₹50,000 or more, banks usually require account debit, cheque or another traceable payment mode.
5. What happens if a demand draft expires?
If a DD expires, it cannot be used for payment. The drawer can request the issuing bank to revalidate it, usually for another 3 months.
6. What is the difference between a demand draft and a cheque?
A DD is issued by a bank after receiving the amount in advance, while a cheque is issued by an account holder and can bounce if there is not enough balance.
7. What is the maximum limit of DD?
There is generally no fixed upper limit, but banks may set internal limits. PAN is usually required for DDs of ₹50,000 or more.