What is a Demand Draft?

A demand draft is fundamentally a negotiable instrument that enables the transfer of funds from one bank account to another, similar to how a check functions. The defining characteristic of a demand draft is that it is a single payment-related document that does not have an accompanying remittance document. It is a cleaner transaction method, as it presents a straightforward mechanism for transferring funds without additional background paperwork requiring submission alongside the payment.

This simplicity makes demand drafts particularly appealing in various banking transactions, as they provide clarity and ease of use when facilitating a payment. The other options, while related to payment methods, describe features or functions distinct from how demand drafts operate. For instance, options referring to checks with automatic payments, requiring multiple signatures, or serving as international money transfers do not align with the key characteristics of a demand draft.