Demand Draft Clearance Time
What is Demand Draft Clearance Time?
The Demand Draft (DD) clearance time varies by location. Local DDs are typically cleared within 1-2 working days, while outstation DDs may take 3-7 working days. Electronic clearing systems can speed up the process for quicker transactions.
Transfer of funds between bank accounts can be done through several negotiable instruments such as cheques, demand drafts (DD), and money orders.
With the recent surge in digitisation of banking transactions in India, new modes of transferring funds like electronic fund transfer have taken priority. These can be processed faster through options like RTGS, NEFT, and IMPS, among others; however, the traditional method of transferring funds through a demand draft is still used extensively, especially in business transactions.
The concept of DD is still existent in the banking system as several educational institutes, business houses, and others continue to utilise DD for several transactions. This is because demand drafts are hard to counterfeit making it a secure source of fund transfer.
How Long Does DD Clearance Take?
The time frame or the clearing time of a DD varies between banks. They are usually cleared within half an hour, or by the end of the working day. Some banks can take up to three working days.
Also, if the DD is for a large amount, it will only be credited to a bank account and not provided as cash. For example, SBI will clear DDs in cash up to Rs.50,000. Any amount above this will be transferred to a bank account only.
A demand draft is a negotiable instrument where the amount is paid before the DD is issued by the bank, hence, the DD is secure and cannot bounce as a cheque could.
How Long is a Demand Draft Valid?
As per the Reserve Bank of India's (RBI) guidelines, a demand draft is valid for 3 months from the date when the draft was issued by the bank. After the third month, you can re-validate the DD upon written request to the issuing bank. The revalidation of a DD can be done only once a year and after a year, the DD will be cancelled by the bank and a new DD will be issued after paying the required fees associated with the process.
DD Clearance Time for Different Banks
The clearance time for a demand draft varies across banks. Here’s a general overview:
- SBI: Within 1–2 hours for inter-branch, 1–2 working days for outstation DDs
- HDFC: Usually within 30 minutes to 1 working day
- ICICI: 1 day for local, up to 3 days for outstation
- Axis Bank: Same-day for local, 1–2 days for outstation Always check with the specific bank for updated timelines and cut-off times.
Steps to Speed Up DD Clearing
To ensure faster demand draft clearance, follow these tips:
- Visit the issuing bank branch for quicker verification
- Submit the DD before the bank's cut-off time (typically before 2 PM on working days)
- Ensure the DD has no corrections or overwriting
- Carry valid ID proof and account details
- For intercity DDs, use RTGS/IMPS where applicable to avoid delays
Common Issues During DD Clearing Process
Some common problems that delay DD clearance include:
- Expired DDs (beyond 3 months)
- Mismatch in beneficiary name or details
- Torn or tampered DDs
- Submission after banking hours or on holidays
- DDs issued from different cities causing inter-branch delays
Proactive verification can help avoid these issues.
Bank Holidays Impact on DD Clearance
Bank holidays affect demand draft clearance. If you deposit a DD on a non-working day, the processing will be deferred to the next working day. Additionally, weekends, public holidays, and regional holidays delay inter-bank communications, especially in intercity clearances.
FAQs on Demand Draft Clearance Time
- How does a demand draft work?
A demand draft is issued to a client by the bank in order to direct one of its branches or another bank to pay a certain amount of money to the specified payee.
- How can I encash my demand draft?
You can encash the demand draft by presenting the draft at the bank.
- How long does a demand draft take to clear?
A demand draft is cleared within 30 minutes by the bank.
- Can I cancel a demand draft after issuing it?
Yes, a demand draft can be cancelled before it is encashed. You need to visit the issuing branch with the original DD, a valid ID proof, and submit a written request. The bank may charge a cancellation fee, and the refund is usually processed back to the original payer's account.
- What happens if a demand draft expires?
If a demand draft expires (after 3 months from the date of issue), it becomes invalid for clearance. However, the payer can approach the issuing bank to request revalidation or a fresh DD, subject to the bank’s policies. Banks may ask for a written application and may charge a nominal fee.
- Is there a fee for DD clearance?
No, banks generally do not charge the beneficiary for DD clearance. However, the person who purchases the demand draft must pay a fee based on the draft amount and issuing bank's fee structure. Charges typically range from ₹25 to ₹100 + GST for lower amounts.
- Can DDs be cleared on the same day?
Yes, local demand drafts can sometimes be cleared on the same day, especially if they are deposited early in the day at the same bank's branch. However, inter-bank or intercity DDs may take 1–2 working days depending on the bank and clearance systems.
- Is Demand draft and Cheque similar?
No, demand draft and cheques are not similar. Cheque is issued by the customers while demand draft is issued by the bank.
- For how many days is the Demand Draft valid?
Demand drafts are valid for a period of 3 months from the date of issue.
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