Question

State one difference between cheque and bank draft.

Differentiate between a cheque and a demand draft.

Answer 1

	Basis of Distinction	Cheque	Bank Draft
1.	Drawer	A cheque is drawn by a person.	A bank draft is always drawn by a bank.
2.	Bearer	A cheque can be drawn payable to the bearer.	A draft cannot be made payable to the bearer.
3.	Charges	In the case of a cheque, the person who receives the payment has to pay collection charges.	In case of a draft, a commission is paid in advance by the sender of the money.
4.	Dishonour	A cheque is dishonoured if the funds in the drawer's account are insufficient.	The draft amount is taken in advance by the bank. There is no question of a draft being dishonoured.
5.	Stop payment	The payment of a cheque can be stopped by giving a written notice to the concerned bank.	The payment of a bank draft cannot be so easily stopped.