What is the difference between demand draft and banker’s cheque?

A demand draft is a pre paid negotiable instrument, wherein the drawee bank undertakes to make payment in full when the instrument is presented by the payee for payment. The demand draft is made payable at a specified branch of a bank at a specified centre. In order to obtain payment, the beneficiary ha to either present the instrument directly to the branch concerned or have it collected by his bank through the clearing mechanism.

A banker’s cheque is another payment instrument which is used by the banks to settle payment obligations on behalf of their customers. This instrument is guaranteed by the bank for its full value and is similar to a demand draft. In practice, these instruments are payable at the branch of issue and are used for payment within the local clearing jurisdiction.