Transfer of funds between bank accounts can be done through several negotiable instruments such as cheques, demand drafts (DD), and money orders.
With the recent surge in digitisation of banking transactions in India, new modes of transferring funds like electronic fund transfer have taken priority. These can be processed faster through options like RTGS, NEFT, and IMPS, among others; however, the traditional method of transferring funds through a demand draft is still used extensively, especially in business transactions.
The concept of DD is still existent in the banking system as several educational institutes, business houses, and others continue to utilise DD for several transactions. This is because demand drafts are hard to counterfeit making it a secure source of fund transfer.
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How Long Does DD Clearance Take?
The time frame or the clearing time of a DD varies between banks. They are usually cleared within half an hour, or by the end of the working day. Some banks can take up to three working days.
Also, if the DD is for a large amount, it will only be credited to a bank account and not provided as cash. For example, SBI will clear DDs in cash up to Rs.50,000. Any amount above this will be transferred to a bank account only.
A demand draft is a negotiable instrument where the amount is paid before the DD is issued by the bank, hence, the DD is secure and cannot bounce as a cheque could.
How Long is a DD Valid?
As per the Reserve Bank of India’s (RBI) guidelines, a demand draft is valid for 3 months from the date when the draft was issued by the bank. After the third month, you can re-validate the DD upon written request to the issuing bank. The revalidation of a DD can be done only once a year and after a year, the DD will be cancelled by the bank and a new DD will be issued after paying the required fees associated with the process.
Check about Demand Draft
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FAQs of Demand Draft Clearance Time
How does a demand draft work?
Ans: A demand draft is issued to a client by the bank in order to direct one of its branches or another bank to pay a certain amount of money to the specified payee.
How can I encash my demand draft?
Ans: You can encash the demand draft by presenting the draft at the bank.
How long does a demand draft take to clear?
Ans: A demand draft is cleared within 30 minutes by the bank.
Is Demand draft and Cheque similar?
Ans: No, demand draft and cheques are not similar. Cheque is issued by the customers while demand draft is issued by the bank.
For how many days is the Demand Draft valid for?
Ans: Demand drafts are valid for a period of 3 months from the date of issue.
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