Cheque Bank Draft

Sr.
No.
Basis of Difference

Cheque

Bank Draft

1.
Meaning
According to the Indian Negotiable Instrument Act, a cheque is an unconditional order directing the banker to pay a certain sum of money only to the order of certain person.
A draft is an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand

2.
Aim
It aims at facilitating businessman for effecting local payments.
It aims at facilitating immediate outstation payments.

3.
Drawer
The drawer is the account holder of the bank.
A draft is the bank itself.

4.
Dishonor
The cheque may or may not be dishonored.
A draft can never be dishonored as it is already paid for.

5.

Bank charges
The bank may not charge for issuing cheque book.
The bank charges a nominal amount to issue a draft.

6.
Payments
Payment of crossed cheques cannot be obtained immediately.
Payment of bank draft can be obtained immediately.

7.
Facility extended to
Cheque facility is extended to account holders of the bank only.
A draft facility is extended to both account holders of the bank as well as outsiders.

8.
Reliable
Cheque issued by an individual may not be cleared due to many reasons such as sign not matching, post dated, less balance, etc.
A bank draft is more reliable as it is issued by the bank only after receipt of payment.