Demand Draft (DD): Types, Charges & How to Create or Cancel

A DD is one of the most reliable banking tools for secure money transfers. The DD full form is Demand Draft. It’s a prepaid instrument where the amount is deducted from your account at the time of issue. So there’s no risk of the payment bouncing later.

Even with online payments becoming more common, DD in bank transactions continue to be popular. They are used for safe, verified transfers like college fees, real estate payments or business deals. 

Keep reading to explore what is DD, how to make demand draft both online and offline and more.

What is a Demand Draft (DD)? 

A Demand Draft (DD) is a secure banking instrument used to transfer money between accounts. The process starts when you visit your bank and request a DD. You provide the payee’s name, the amount and the branch where it should be payable. The bank then deducts the amount from your account or accepts it in cash before issuing the draft.

Because the amount is prepaid, there’s no risk of the DD bouncing. Once the recipient deposits it, the funds are transferred directly to their account. One of the main benefits of a DD in bank transactions is that you don’t need the recipient’s account number or IFSC code. Just their name and city are enough for the transfer.

It’s a simple, safe and user-friendly way to make secure payments for government or school fees, business deals or even property transactions.

Demand Draft Charges

Banks charge a small fee for issuing or cancelling a demand draft. The charges depend on the transaction amount and whether the DD is created online or at a branch.

Here’s a quick look at demand draft charges across a few major banks:

Bank	Charge Range and Conditions
HDFC Bank	₹75 per draft (₹50 via Phonebanking). For higher amounts, ₹2.50 per ₹1,000 (min ₹100); ₹2 per ₹1,000 above ₹1 lakh (min ₹250, max ₹5,000)
ICICI Bank	No charge for small drafts. For large transactions, ₹3 per ₹1,000 (min ₹75, max ₹15,000)
Punjab National Bank (PNB)	Urban: ₹40 up to ₹5,000 and ₹4 per ₹1,000 thereafter (max ₹12,000)Rural: ₹30 up to ₹5,000 and ₹3 per ₹1,000 (max ₹12,000)
State Bank of India (SBI)	₹25 for DDs up to ₹5,000, ₹50 for ₹5,001-₹10,000, ₹5 per ₹1,000 (min ₹60) up to ₹1 lakh and ₹4 per ₹1,000 (min ₹600, max ₹2,000) beyond ₹1 lakh

Please note: These rates may vary across branches or with policy updates. Always verify the latest fees on your bank’s official website before issuing a DD.

Demand Draft Validity

A demand draft has a limited validity period, after which it becomes unusable. Here’s what you should know:

• A demand draft is valid for 3 months from the issue date as per RBI guidelines
• If not presented within this period, it becomes invalid. But the funds remain safe with the issuing bank
• You can revalidate the DD by submitting a written request to your bank. Once approved, the validity extends for another 3 months
• A revalidated DD cannot be renewed after this extension
• Some banks may levy a small revalidation charge.

Types of Demand Draft

Here are the two main types of DDs and their distinguishing characteristics:

1. Sight Demand Draft

This is an immediately payable DD. The payee can receive the amount in their bank account by presenting certain documents, including proof of identity. It is generally used for international transactions, ensuring a prompt transfer.

2. Time Demand Draft

A time demand draft is payable only after a specific date mentioned on it. The recipient can encash it once that period has passed. It’s often used in business transactions where payment is scheduled for a later date.

Features of a Demand Draft

Here are some key features of demand drafts: 

• Secure and prepaid: A DD is issued only after the bank receives the full amount. This makes it a more secure form of payment. 
• No signature needed: Unlike cheques, demand drafts don’t require the account holder’s signature. This makes them less prone to fraud.
• Tamper-proof and fixed amount: The amount on a DD is fixed at the time of issue and cannot be changed. This ensures the payee receives the exact amount stated.
• Widely accepted and account-free: Demand drafts are accepted across India by institutions, colleges and businesses. You don’t need to have an account with the issuing bank.
• Safe for large transactions: There’s no set limit on how much money can be sent using a DD. It’s a suitable option for high-value payments.
• Refundable if unused: If the DD isn’t delivered on time, the bank refunds the amount to the person who initiated it. 

How to Make Demand Draft Offline?

Step 1: Visit the nearest branch of your bank
Step 2: Ask the bank staff for a demand draft application form
Step 3: Fill out the form with details like amount, currency, payee name and reason for payment
Step 4: Submit the form at the counter
Step 5: Pay using cash, cheque or directly from your account. If the amount is above ₹50,000, provide your PAN
Step 6: Keep a photocopy of the DD for your records

How to Fill Demand Draft​ Form Online?

Step 1: Log in to your bank’s internet banking account.
Step 2: Go to the ‘Requests or Enquiries’ section and select ‘Issue Demand Draft.’
Step 3: Choose the account you wish to pay from.
Step 4: Enter the amount, payee name and payment reason. Also, add the branch code and select the branch where the DD should be payable.
Step 5: Pick how you want the DD delivered, courier or branch pickup.
Step 6: Review all details and click ‘Submit’ to complete your request.

Both these methods are simple. You can choose the one that works best for you, depending on convenience and urgency.

How to Cancel a Demand Draft?

If a demand draft (DD) is no longer needed or has errors, you can request its cancellation at the issuing bank. However, a DD can only be cancelled if it hasn’t been handed over or deposited by the payee. Here’s how the process works:

• Step 1: Go to the bank branch where the DD was issued and carry a valid ID proof
• Step 2: Ask for a demand draft cancellation form and provide details such as the DD number, amount, issue date and reason for cancellation
• Step 3: Submit the original draft along with the form. The bank will verify its status
• Step 4: Pay cancellation fees. Banks usually charge a nominal fee
• Step 5: Collect the refund or confirmation

This ensures your DD is securely cancelled and the funds are safely returned without any complications.

Sample Demand Draft Cancellation Letter

To
The Branch Manager
[Bank Name]
[Branch Address]

Subject: Request for Cancellation of Demand Draft

Dear Sir/Madam,

I am writing to request the cancellation of the demand draft issued from my account. Below are the details:

• Demand Draft Number: [Enter DD number]
• Amount: [Enter amount]
• Issue Date: [Enter date]
• Payee Name: [Enter name]

The draft has not been delivered or deposited by the payee. Kindly cancel the same and initiate the refund.

Thank you for your assistance.

Yours faithfully,
[Your Name]
[Account Number]
[Contact Number]
[Signature]

RBI Guidelines for DD in Cash

Here are some guidelines outlined by the RBI regarding DD:

• Banks must issue demand drafts for amounts of ₹50,000 and above only by debiting your account or accepting cheques or other instruments, except cash.
• You cannot encash demand drafts; the bank at which you have deposited the draft will deposit it into your bank account.
• For transactions over ₹50,000, you must provide your permanent account number (PAN).
• The demand draft validity stands at 3 months after issue, and the process for revalidation is also allowed after 3 months.

With these simple steps, you can complete the demand draft procedure. The payee can credit the amount in their bank account by submitting the demand draft at their nearest branch. Equipping yourself with these details about a DD makes it easy for you to transfer funds across bank accounts without the risk of rejection. 

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FAQs on Demand Draft

How do you make a demand draft?

Check the process of requesting a DD below:

• The process starts with going to the bank and requesting a DD form.
• Fill in the details like your name, the names of the payee and drawee, the amount, the reason, etc.
• Payment of the amount for which you want to create a DD.
• Once you show your ID to verify the transfer, you will receive the DD in the payee’s name.

What is DD in bank?

In banking terms, a demand draft (DD) is a negotiable instrument for transferring funds without knowing the recipient’s account details. 

How do you make a demand draft with cash?

You can visit any bank and request a demand draft form. After completing the form and submitting the cash, the bank will generate a DD for the cash amount.

Why is DD used?

A Demand Draft is used when you want to make secure payments. It’s commonly used for college fees, application forms, large deposits or transactions between two different banks.

How to withdraw money from a DD?

The person whose name is on the DD needs to deposit it into their bank account. Once processed, the amount gets credited just like a cheque.

What is the maximum limit of DD?

There is no fixed upper limit for issuing a DD. However, if the amount is ₹50,000 or more, PAN details are mandatory as per RBI rules.