Difference between Cheque and Demand Draft

Difference Between Cheque and Demand Draft :

Cheque : Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account held in the maker/depositor's name with that Bank.

Demand Draft : A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument. To buy a "DD" from a Bank, you are required to fill an application form which asks the following information :

Name of the recipient

Amount to be transferred

Place where the transferred money is to be paid

Mode in which you will pay money to the Bank i.e. in cash or by debit to your account

Cheque vs Demand Draft (DD) : 

Cheque is issued by account holder while DD is issued by bank.

Cheque can be made payable to bearer while DD cannot.

Issuer of the cheque is liable to cheque and not backed by a bank gurantee while DD is backed by Bank Gurantee.

Cheque is drawn by account holder of  bank while DD is drawn by one branch of a bank on another branch of the same bank.

In Cheque drawer and drawee are the different persons while in DD drawer and drawee are the same Bank.

Cheque can be dishonored for the want of sufficient balance in the account whereas draft can not be dishonored. Hence there is certainity of payment in the DD.

In Cheque, Payment can be stopped by the drawer of cheque while payment of DD can not be stopped.