A demand draft is more secure than a normal cheque as it can only be credited to a specific payee’s account, and a customer can only be reimbursed on request under indemnity if the draft is lost or stolen.

A Demand Draft is a much safer and certain method of payment than cheques, since in the case of cheques, an individual is the drawer and hence the cheque can be dishonoured by the drawee bank due to insufficiency of funds in the drawer’s account. But since in the case of a DD, the drawer is a bank, payment is certain and it cannot be dishonoured.

Since it is a cheque issued by a bank ( that is, drawer is a bank ) it does not carry the signatures of the customer, unlike the case of ordinary cheques which carry the signature of the customer ( who is the drawer ). Instead, a DD carries signatures of one or two bank officials, depending on the DD amount. Usually the DD will carry the name/code of the Drawee branch and of the Issuing ( Drawer ) branch both. The placements of this varies from bank to bank.