Banker’s Cheque or say pay order is an instrument, generally non-negotiable, issued by the bank on behalf of the customer, containing an order to pay a specified sum to the specified person, in the same city. On the other hand, demand draft is a financial instrument, used by people for the purpose of transferring money from one place to another.
Whether it is a banker’s cheque or a demand draft, the validation period of the two instruments is 3 months, i.e. after the expiry of three months, the instrument is of no use. To a layman, there is no significant difference between these two, but actually, these two modes of payment differ in a number of ways, which we have discussed in this article in detail.
| Basis for Comparison | Banker's Cheque | Demand Draft |
|---|---|---|
| Meaning | Banker's Cheque or Payment Order is a cheque issued for making the payments within the same city. | Demand draft is a negotiable instrument used to transfer money from one person at one city to another person in another city. |
| Special feature | All banker's cheque are pre-printed with "NOT NEGOTIABLE". | Demand draft of Rs. 20000 or more should be issued with "A/c payee" crossing. |
| Clearance | It can be cleared in any branch of the same city. | It can be cleared at any branch of the same bank. |
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