Meaning and Definition of Bank Draft - 

        The Term 'Draft' has not been included in the definition of  Negotiable Instruments given under Section 13 of the Negotiable Instrument Act 1881. According to Section 85(A) of the Negotiable Instrument Act 1881 "Draft" is an order to pay money drawn by one of a bank upon another office of the Same Bank for a sum of money payable to order on demand.   

Parties in a Bank Draft Namely - 

1) Drawer Bank

2) Drawee Bank

3) Payee

Characteristics of Bank Draft -

There are Following Characteristics of a bank draft

1) It is also an unconditional Instruments like other Negotiable Instruments which contain an order to pay.

2) A bank draft is drawn by one office of a bank upon another office of the same bank. Sometimes, it is drawn by a bank upon another bank also. 

3) A sum of money Payable by bank Draft must be certain.

4) The payee of the draft must be certain. It must be payable to order on demand. The payee has a right of endorsement. According to Section 85(A) of the Negotiable Instrument Act 1881, It is not payable to bearer.

5) Any Person can receive the bank draft by depositing the sum of money in the bank. On deposit of the Sum of money, the Bank issues the draft to the person concerned. The bank charges also the Commission on the issue of the Draft.

See Also... 

Insurance Regulatory and Development Authority

Power of bank to file winding up petition (Section 45MC of the Reserve bank of India Act 1934)

Parties to Negotiable Instrument | Banking Law

Compensation on Dishonor | Banking Law


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