Definition of Demand draft:
When a bank prepares a demand draft, the amount of the draft is taken from the account of the customer requesting the draft and is transferred to an account at another bank. The drawer is the person requesting the demand draft; the bank paying the money is the drawee; the party receiving the money is the payee. Demand drafts were originally designed to benefit legitimate telemarketers who needed to withdraw funds from customer checking accounts using their bank account numbers and bank routing numbers.
A demand draft is a method used by an individual to make a transfer payment from one bank account to another. Demand drafts differ from regular normal checks in that they do not require signatures to be cashed. In 2005, due to the increasing fraudulent use of demand drafts, the Federal Reserve proposed new regulations increasing a victim's right to claim a refund and holding banks more accountable for cashing fraudulent checks.
Bill of exchange payable on demand that is on presentment (on sight). Person or party that wrote the draft is called a drawer; the person, party, or bank who is expected to pay it (on whom it is drawn) is called a drawee or a payer, and the person or party who receives the payment is called a payee. A check is a demand draft drawn on a bank.
A financial draft payable on demand.
How to use Demand draft in a sentence?
- A demand draft is a way to initiate a bank transfer that does not require a signature, as is the case with a check.
- A demand draft is a prepaid instrument; therefore, you cannot stop payment on it in the case of fraud or mis-intended recipient.
- Because demand drafts can be used to defraud people, there are regulations now in place that allow victims to recover funds from the holding bank.
- As a result, the banks customers in all its ‘computerised’ branches wait for hours in a row every morning to encash their cheques, or get a demand draft or even to remit cash.
Meaning of Demand draft & Demand draft Definition