With the introduction of digitalization in the banking sector, the term ‘conventional banking’ can now be referred as ‘convenience banking’. Traditional banking-related negotiable instruments like cheques and demand drafts are nearly obsolete in today’s world. Presently, we prefer the mode of instant payment services, such as RTGS, NEFT, IMPS and others for funds transfer as well. However, there are still certain scenarios in which people prefer the use of Demand Drafts. You will find them mostly in the cases of college admissions, applications for jobs or in such cases where a hefty amount needs to be paid. While cheques have a chance of being bounced or dishonoured, people mostly prefer demand drafts, as they are drawn only after making sure that the drawer has sufficient balance to make the requested payment.
What is a Demand Draft
A Demand Draft is a form of negotiable instrument where the bank of the drawee undertakes to make complete payment of the amount stated in the demand draft, when the other party presents it to the drawee bank. The condition with a demand draft is that it is payable only at the branch and the time as specified in the document. Unlike cheque, it cannot be presented in any branch of the bank. There are many such transactions where people are not willing to accept cheque for the fear of it being dishonoured. In these situations a demand draft always works, as the money transfer in case of a demand draft is guaranteed. The validity of a demand draft lasts three months from the day it has been drawn.
Yes bank also offers the services of demand draft to its customers. Some of the basic features of a demand draft are as under:
- It is payable of demand at the bank of the drawee.
- It cannot be simply made payable to the bearer. The beneficiary of the demand draft has to be present in person.
- The beneficiary can also opt for the clearing mechanisms of his/her bank in order to collect the demand draft.
- Section 85(A) of the Negotiable Instruments Act 1881.
Fees & Charges
As per RBI guidelines, it is advised that the banks should charge a reasonable rate for the demand draft services offered to their customers. However, since there are no fixed rates offered by RBI every bank has its own set of charges for providing the demand draft services.
For instance, SBI charges Rs. 5 per every Rs. 1000 above Rs. 10,000. However, uptil Rs. 10,000 there are no charges.
Yes Bank charges are as under:
- Where DD is Payable at YES Bank Locations the charge is free up till 4 transactions per month. Beyond that a fee of Rs. 50 will be charged.
- Where DD is payable through net banking /mobile banking, there are no charges, but a courier fee of Rs. 20 is charged.
- Where DD is payable at a correspondent bank location, 2 transaction per month is free after that it is Rs. 2.5 per Rs. 1000. (Min. 50 and maximum 5000)
How to Generate a YES Bank Demand Draft
- Visit the bank, preferably where you have an account. That makes it easier to pay by cheque to the bank. Otherwise you can simply take the specified amount to your nearest bank and get a DD made.
- Ask the bank to fill up a DD form.
- Fill all the requisite details as asked in the form. These will be – name of the beneficiary, amount of demand draft, mode of payment, place of encashment, cheque number and signature.
- Next you need to submit the demand draft form to the bank along with the cash/cheque and the applicable charges, if any. These charges, as stated earlier, vary from bank to bank.
When the account exceeds beyond Rs. 50,000 and your mode of payment is cheque, in that case, you will have to give your pan card details.
Yes bank also has the option of online demand draft. The process is the same for online form filling as well. You just have to fill in the details and apply. They can either send you the DD by courier, for which charges may apply. Or you can personally go an collect the demand draft from the respective branch.
The demand draft is ideally couriered by the bank, either to the drawer’s address or to that of the beneficiary, depending on the request. The courier takes about 3-5 business days to reach the requested destination.