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The full form of DD is Demand Draft. One of the financial tools used to simplify payments is the demand draft. It is utilized to start transactions between banks. It is a negotiable instrument that promises to pay a certain sum of money to the designated recipient. Demand drafts may only be issued by banks and individuals are not permitted to issue their own DDs. It is frequently used when both parties are not familiar with one another.
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Demand drafts offer more security than cheques. This is so that the drawer may pay before writing out the cheques. This is because a cheque may be written without verifying that there are enough money in your bank account, whereas the drawer must make payment before issuing a bank draft to the bank. Cheques may therefore bounce, but drafts ensure safe and prompt payment. Demand Drafts are known as such because they are payable on demand.
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Characteristics of DD
- It is a safe method of receiving payment.
- Typically, it lasts for three months.
- The transfer takes place between banks.
- It facilitates payment.
- Like with cheques, it might potentially be disregarded.
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People Involved in DD
- Drawer: A demand draft maker who approaches a bank.
- Drawee: The bank that delivers money to the receiver is known as the drawee.
- Payee: The individual who shows the DD to the bank in order to receive payment.
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Demand Draft Usage
- When a transaction will be made between two strangers or those who lack confidence, a demand draft will be employed.
- Demand drafts assure complete payment.
- Like cheques, demand drafts guarantee no bounce. For instance, the majority of institutions only take cash and DD payments due to the DDs’ dependability.
FAQ
It is one of the payment instruments used in India, demand draft (DD), also popularly known as DD.
It is a Disbursing Officer, a government officer who approves payments using a designated bank account.
DD is the full form of a Union Territory in India, called Daman and Diu.
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