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.