Banking, Business, Commerce



  1. Bank draft is a document drawn by one bank upon on another bank or its other office, which contains an order for the payment of specified amount.  
  2. A Bank draft is a cheque or an instrument in writing drawn by one bank upon another bank or by one branch of a bank upon its another branch for a certain sum of money payable on demand or to the order of payee mentioned therein. 
  3. It is the assent (will) of banker to draft as bills of exchange or promissory note because is one who issues and pays the draft. A draft cannot be considered a cheque.


  1. Sender: A person who sends the money to payee.
  2. Drawer: It is that branch of the Bank, which issues or makes the draft.
  3. Drawee: It is that branch of the bank on which the draft is issued/drawn (Which pays the amount of draft).
  4. Payee: He is a person who receives the amount of draft. 4. (Payee’s name is always mentioned on draft).


  1. Name of bank draft issuing bank & its branch.
  2. Serial number of draft.
  3. Date of issue.
  4. Payee name.
  5. Amount of money.
  6. Drawee bank and its branch.
  7. Signatures of manager and an officer of draft issuing bank.


When a person wants to get a bank draft from bank, he gives an application in printed form along with specific amount and commission to the bank. The cashier stamps the application form after receiving the money and sends it to concerned office who issues the draft according to the amount on form. After this, the draft is sent to the payee. The payee receives the amount of draft from the branch of drawer’s bank.


Bank draft has two main kinds.

1. Order Bank Draft: In order bank draft the payment is only made to a nominated payee whose name is written on it. Firstly, the bank identifies the payee and then makes the payment. It has following two types:

  • Inland Bank Draft: The draft, which is drawn and paid in the same country is called inland bank draft.
  • Foreign Bank Draft: The draft, Which is drawn and paid in two different Countries is called foreign bank draft. This draft is used to send the money in foreign countries. 

2. Crossed Bank Draft: If two transverse parallel lines are drawn on the face of bank draft then, it is known as crossed bank draft. The amount of such draft cannot be received at the bank counter. It also has two types:

  • Inland Bank Draft: If the draft is drawn and paid in the same country then it is said inland bank draft.
  • Foreign Bank Draft: If the draft is drawn and paid in two different Countries then it is called foreign bank draft.


1. In Writing: Bank draft is always in writing.

2. Unconditional Order: Bank draft is an unconditional order of payment drawn by one branch of the bank on its other branch.

3. Payable on Demand: The bank draft is always payable on demand.

4. Crossing: The bank draft can be crossed for safety purpose, but in this case the draft cannot be cashed at the counter.

5. Easy Transfer: Huge amounts can be easily transferred from one place to another with the help of bank draft.

6. Safe Mode of Payment: Bank draft is the safest mode of payment.

7. Specified Amount: Bank draft is issued for the payment of specified amount and the drawer bank receives this amount at the time of draft making.

8. Time Saving: The use of bank draft for the payment saves time.

9. Certainty of Payment: After the issuance of bank draft, the payment becomes certain because the payment of draft cannot be stopped.

10. Reliable Credit Instrument: The government and private concerns use the draft frequently for making the payments safe.

11. Commission: Bank charges commission from its customers for issuing a draft, which depends upon the value of draft.

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