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Banker’s Cheque vs. Demand Draft: What's the Difference?

Edited by Aimie Carlson || By Janet White || Published on February 10, 2024
A banker's cheque is a cheque issued by a bank payable at its own branch, while a demand draft is a negotiable instrument drawn by one bank on another or its own branch.

Key Differences

A banker's cheque, also known as a cashier's cheque, is issued by a bank and guaranteed by the bank itself, making it a secure form of payment. A demand draft, on the other hand, is a financial instrument used to transfer money from one bank account to another.
Banker's cheques are usually used for local transactions within the same city. Demand drafts are more suited for transferring money across different cities or countries.
The funds for a banker's cheque are withdrawn from a customer's account immediately when the cheque is issued. In the case of a demand draft, the amount is paid upfront, and the draft is then sent to the recipient.
A banker's cheque is generally considered a safer form of payment compared to a personal cheque as it is guaranteed by the bank. A demand draft is also secure, but it involves the process of drawing the draft from one bank account and depositing it into another.
Both banker's cheques and demand drafts are used for secure transactions, but the choice depends on the transaction's nature and geographical scope.

Comparison Chart


Local transactions, guaranteed by issuing bank
Transferring funds between cities or countries

Withdrawal of Funds

Funds withdrawn immediately from customer's account
Amount paid upfront, then draft issued

Geographic Scope

Typically used within the same city
Suitable for long-distance transactions


Considered very secure as backed by the bank
Secure, involves inter-bank transactions

Typical Use

Often used in real estate, high-value purchases
Common for education fees, foreign transactions

Banker's Cheque and Demand Draft Definitions

Banker's Cheque

Funds are immediately taken from the issuer’s account.
The banker’s cheque was issued after deducting the amount from her account.

Demand Draft

A preferred method for educational and foreign transactions.
Her university fees were paid through a demand draft.

Banker's Cheque

Used for secure transactions within the same city.
The real estate deal was finalized with a banker’s cheque.

Demand Draft

Used for secure transactions over distances.
They received a demand draft from a foreign client.

Banker's Cheque

Common in high-value local transactions.
The artwork was purchased using a banker’s cheque.

Demand Draft

A negotiable instrument for transferring funds between banks.
He sent a demand draft for his son's tuition fees abroad.

Banker's Cheque

A safer alternative to personal cheques.
For the charity auction, they accepted a banker’s cheque.

Demand Draft

Involves payment upfront before issuance.
The demand draft was prepared after he paid the amount in cash.

Banker's Cheque

A cheque issued and guaranteed by a bank.
He provided a banker’s cheque for the down payment of his new car.

Demand Draft

Suitable for inter-city or international payments.
For her overseas purchase, she used a demand draft.


Are banker’s cheques and demand drafts the same?

No, they serve similar but distinct purposes in financial transactions.

How secure is a banker’s cheque?

Very secure, as it's backed by the issuing bank.

How quickly are funds withdrawn for a banker’s cheque?

Funds are withdrawn immediately when the cheque is issued.

What is a demand draft?

A demand draft is a negotiable instrument for transferring money between banks.

What are banker’s cheques commonly used for?

They're often used for real estate and high-value local transactions.

What is a banker’s cheque?

It's a cheque issued and guaranteed by a bank for local transactions.

Can demand drafts be used internationally?

Yes, they're commonly used for international payments.

Can I cancel a banker’s cheque?

It's difficult but possible under certain conditions.

Is a demand draft suitable for small transactions?

Not typically, as it's more suited for larger, especially long-distance, transactions.

What’s the process for getting a demand draft?

You pay the amount upfront, and the draft is issued to the recipient.

Is a banker’s cheque suitable for urgent transactions?

Yes, as it's a guaranteed form of payment.

Is a banker’s cheque the same as a cashier’s cheque?

Yes, they are essentially the same.

Who can issue a demand draft?

Any bank can issue a demand draft.

Can a banker’s cheque bounce?

Very unlikely, since it’s backed by the bank's funds.

How long does it take to clear a demand draft?

It varies, but it usually takes a few days.

Are banker’s cheques accepted everywhere?

Mostly, within the issuing city or country.

What fees are associated with a demand draft?

There are nominal issuance and handling fees.

What if a banker’s cheque is lost?

Report immediately to the bank; they may issue a stop-payment and a new cheque.

Can a demand draft be issued in foreign currency?

Yes, it's commonly used for foreign currency transactions.

How long is a demand draft valid?

Typically valid for 3 to 6 months, depending on the issuing bank’s policy.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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