Demand Draft (DD): What It Is & How to Make One
Last verified: June 2026, against RBI/NPCI rules and official procedures. Charges, limits and processes can vary by bank and change over time — confirm with your bank. General information, not financial advice.
A demand draft (DD) is a prepaid, guaranteed payment instrument — useful when the payee wants assured funds (admissions, tenders, some registrations). Here is how it works and how it differs from a cheque.
What a DD is
A demand draft is issued by a bank after you pay the amount upfront, so it can’t bounce — the funds are guaranteed by the bank. The payee deposits it like a cheque.
DD vs cheque
| Cheque | Demand draft | |
|---|---|---|
| Funds | From your account when cleared (can bounce) | Prepaid & guaranteed (cannot bounce) |
| Issued by | You (account holder) | The bank |
| Cost | Cheque leaf only | Issuance charge applies |
How to make a DD
- Visit the bank (or use net banking where offered).
- Fill the DD form with the payee name, amount and city of payment.
- Pay the amount + the bank’s DD charge (by debit to your account or, within limits, cash).
- Collect the DD; hand or send it to the payee.
Charges and cancellation
Banks levy a small issuance charge (often a percentage with a minimum). A DD can be cancelled by surrendering it to the issuing bank, which refunds the amount after a cancellation fee. A DD doesn’t “expire” but is typically valid for 3 months for clearing; revalidate if older.
When to use a DD
When the recipient insists on guaranteed funds — college admissions, government fees, tenders, or paying a stranger who won’t accept a personal cheque. For most other cases, NEFT/IMPS/UPI is faster and cheaper — see NEFT vs RTGS vs IMPS.
FAQs
Can a demand draft bounce?
No — it is prepaid and guaranteed by the bank, so it cannot bounce for insufficient funds.
How is a DD different from a cheque?
A cheque draws from your account when cleared and can bounce; a DD is paid for upfront and guaranteed.
Can I cancel a DD?
Yes — surrender it to the issuing bank for a refund, minus a cancellation charge.
