DD or Demand Draft is a household name and is as familiar in this country as cheques. In fact, at many places – including government organisations and educational institutes – demand drafts are usually preferred over cheques as their payment can’t be denied as in the case of a cheque owing to insufficient funds.
That is because demand draft is a prepaid instrument wherein the bank, by whom it has been made, undertakes the responsibility to make the full payment whenever it is presented for payment. While making a DD, the concerned bank (drawee) deducts the amount of the draft along with the necessary charges from the account of the drawer (the person who wishes to make a DD in the name of the payee), and it is, therefore, their responsibility to honour the DD when it is presented for payment.
DD charges, however, are not constant and may vary as per the value of the draft and from bank to bank. The leading banks of the nation usually levy DD charges varying from Rs 25 to Rs 50 on each demand draft, up to Rs 10,000.