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The bank draft will be issued as per the customers directions regarding the amount, payee details, etc. The name and amount of an individual (Payee) will appear on the document. This draft can also be used in foreign countries to close a transaction or process payment.
Bank Drafts: What They Are and How They Work. A little like a cheque, a little like a money order, a bank draft is a guaranteed payment method that allows you to transfer large amounts of cash from your bank to a third party.
As the purchaser of the bank draft, you are responsible for delivering the bank draft to the payee. Once the bank draft has been deposited by that individual or entity, their financial institution may still put a hold on the funds until the bank draft clears the payments system.
A bank draft is a negotiable instrument where payment is guaranteed by the issuing bank. Banks verify and withdraw funds from the requesters account and deposit them into an internal account to cover the amount of the draft. A seller may require a bank draft when they have no relationship with the buyer.
Unlike an e-transfer, a bank draft does not have a maximum amount limit and does not require the banking information of the payee. Thus, bank drafts are commonly used when making large purchases, such as buying a house or car.
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Examples of Bank Draft Some commonly used examples are: Demand Draft. Certified Cheque. Money Orders.
A bank draft looks like a regular cheque and is made out to the payee. The bank information and the amount paid will also be printed on the draft. However, the payers signature is unnecessary, and their name is often not even included.
While the clearing cycle normally takes three days, certainty of payment can actually take up to five or six days.
The name of the person or entity you want to pay appears on the bank draft. You then give or send the draft to the recipient, who can deposit or cash it as they would a cheque.
The name of the person or entity you want to pay appears on the bank draft. You then give or send the draft to the recipient, who can deposit or cash it as they would a cheque.

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