Demand Draft (DD) Complete Guide
How to make a DD, bank charges, cancellation rules, and when to use a DD instead of a cheque or NEFT transfer.
What is a Demand Draft?
A Demand Draft (DD) is a pre-paid negotiable instrument issued by a bank, directing another branch of the same bank (or a correspondent bank) to pay a specified amount to the named beneficiary. Unlike personal cheques, a DD is guaranteed by the bank because the funds are collected upfront before issuance.
This makes DDs the safest offline payment method in India they cannot bounce, cannot be stopped, and are legally equivalent to cash. They are widely used for college admissions, court deposits, property registrations, and government fees.
How to Make a Demand Draft
Visit Your Bank Branch or Use Net Banking
You can make a DD at any bank branch or through internet banking (most banks now support online DD). For branch visit, fill the DD Application Form. For net banking, navigate to "Demand Draft" or "Fund Transfer" ? "Issue DD".
Fill Required Details
You need: Payee name (exactly as it should appear), amount (in figures and words), payable city (where the DD will be encashed), and your account number. For DDs above ?50,000, PAN card details are mandatory as per RBI KYC norms.
Pay the Amount + Commission
The bank debits the DD amount plus commission charges from your account. If you're a non-account holder, you can pay in cash (for DDs up to ?50,000 only RBI rule). The charges depend on the DD amount and whether it's local or outstation.
Collect the DD Instrument
The bank issues a printed DD with a unique serial number, MICR code, and IFSC of the issuing branch. For online DDs, the bank courier it to your registered address or you can collect it from the branch. Keep the counterfoil/receipt safe you'll need it for cancellation or tracking.
DD Commission Charges (2026)
| DD Amount | Branch Charges | Online Charges |
|---|---|---|
| Up to ?5,000 | ?25 | ?0 ?15 |
| ?5,001 ?10,000 | ?50 | ?25 |
| ?10,001 ?1,00,000 | ?5 per ?1,000 | ?2.5 per ?1,000 |
| Above ?1,00,000 | ?3 per ?1,000 | ?1.5 per ?1,000 |
DD vs Cheque vs NEFT
| Feature | Demand Draft | Cheque | NEFT/RTGS |
|---|---|---|---|
| Can bounce? | No ? | Yes ? | No ? |
| Payment guaranteed? | Yes (bank-backed) | No | Yes |
| Speed | 1-3 days | 1-3 days | Instant-2hrs |
| Physical required? | Yes | Yes | No ? |
| Max amount | No limit | No limit | ?2L (NEFT batch) |
| Needs IFSC? | Issuing branch | MICR code | Yes mandatory |
DD Cancellation & Revalidation Rules
Cancellation: Only the purchaser (not the payee) can cancel a DD. Submit the original DD + application form + ID proof at the issuing branch. Refund is processed within 7 working days after deducting ?100-500 cancellation charges.
Revalidation: Expired DDs (older than 3 months) can be revalidated by the issuing branch for ?50-100. The revalidated DD gets a new 3-month validity period.
Lost DD: If you lose a DD, immediately inform the issuing branch in writing. The bank issues a duplicate DD after an indemnity bond and a waiting period of 14-30 days. Charges: ?100-500.
Frequently Asked
What is a Demand Draft and how is it different from a cheque?
A Demand Draft is a bank-issued pre-paid instrument the money is already collected from the buyer before issuance, making it impossible to bounce. A cheque is issued by an individual from their personal account and can bounce if funds are insufficient. DDs are preferred when guaranteed payment is required (admissions, legal deposits, property).
How much does a Demand Draft cost?
DD charges vary: up to ?5,000 costs ?25, ?5,001-?10,000 costs ?50, ?10,001-?1,00,000 costs ?5 per ?1,000, and above ?1 lakh costs ?3 per ?1,000 (at branch). Online DD issuance is approximately 50% cheaper. GST at 18% applies on all commission charges.
What is the validity period of a Demand Draft?
A DD is valid for 3 months from the date of issue. After 3 months, the DD becomes "stale" and banks will not honor it. However, you can get it revalidated at the issuing branch by paying ?50-100 charges. The revalidated DD gets a fresh 3-month validity.
Can I make a Demand Draft without a bank account?
Yes, but only for DDs up to ?50,000. You can pay in cash at any bank branch and get a DD issued. For amounts above ?50,000, a bank account is mandatory as per RBI's anti-money laundering (AML) guidelines. PAN card is required for all DDs above ?50,000.
Can a Demand Draft be cancelled or stopped?
Only the purchaser can cancel a DD the payee cannot. Submit the original DD with a cancellation request at the issuing branch. If the DD has already been encashed, cancellation is not possible. For lost DDs, an indemnity bond is required. Refund takes 7-14 working days after deducting cancellation charges. Compare with cheque process ?
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