Question

What is the purpose of a demand draft?

• A. To store valuables
• B. To send money from one place to another
• C. To transfer money internationally via telegraph
• D. To withdraw cash from an ATM

Answer 1

Answer:

B. To send money from one place to another

• A demand draft (DD) is a widely used banking instrument that serves as a secure way to transfer money. It's more reliable than a personal check because it is issued by a bank and the payment is guaranteed since the amount is already debited from the payer's account when the draft is issued.

Some key points about demand drafts:

1. It is valid for 3 months (as shown in one of the similar questions)

2. Payment can be stopped if the draft is lost (as indicated in another similar question)

3. It's a safer alternative to carrying cash for making payments

4. The amount is payable on demand, hence the name "demand draft"

• This banking instrument is commonly used for making payments for educational fees, business transactions, and other situations where a guaranteed form of payment is required.