In the case of a bank draft, some bank representatives act as an intermediary.Ģ. Also, a bank certifies a cheque by adding the word ‘certified’ to the signature.ġ. However, the bank official signed a certified bank draft, making it more secure.Ī certified cheque requires the customer’s signature. The certified cheque is issued by a customer who holds an account in the bank and orders the bank to pay the specified person or the bearer of the cheque.Ī bank draft does not require a customer’s signature. Then, the bank directly transfers to the bank account, which may be in the same bank or another. The bank issues a bank draft on request from its customers. The bank provides this facility where the drawer’s account is present. It is a payment instrument that allows businesses and individuals to settle transactions. However, a certified cheque is similar except that the bank employee verifies if the fund is available to make a payment, keeps that amount aside, and signs or certifies that the amount is available. The amount is deducted after the employee certifies it.īank Draft vs Certified Cheque Comparative Table BasisĪ bank draft is a payment instrument issued by the bank at the payer’s request.Ĭheques are given by customers and are not guaranteed. After it is confirmed, the employee processes it.The bank employee checks if the issuer has sufficient funds in the account.In the case of certified cheques, an intermediary has also been involved: the bank employee.The procedure followed for a certified cheque is as follows:.The process is complete once the recipient deposits or cashes the draft.At this point, the bank deducts the amount from your bank account.The bank issues a draft on your request but processes it only after verifying that the account has sufficient funds to cover the cheque.In the case of a bank draft, some bank representatives act as an intermediary.The process followed by a bank draft is as follows:.Similar to this, particulars necessary for a certified cheque are date, name, amount (in words and the figure), and signature. A bank draft requires the date, the amount payable, and the payee’s name.A bank draft is prone to fraud and can be misused. As the above suggests, a certified cheque is charged more than a bank draft since it is certified and signed.That means enough funds are available to process the certified cheque. In comparison, certified cheques require a signature and are processed when the bank employee approves them. For a bank draft, a signature is not required.Therefore, the holder requesting is a drawer, and the party receiving is a payee Payee A payee refers to a person, business, government, or any other entity that receives payment for providing goods or services. On the other hand, in the case of a bank draft, the bank issues it. The account holder is the drawer of the cheque.The key difference is that a certified cheque is used by its customers to pay for goods and services, and a bank draft is an instrument one can use for the same except that bank provides it. Understanding how these instruments work is important in choosing the right one for your situation. However, the method to achieve the same objective is different. Both of these instruments draw from available funds in the bank account. Though they sound similar, there are several points in which they differ. Source: Bank Draft vs Certified Cheque ()Ĭertified cheques and bank drafts are some of the services banks offer to their customers, which help them pay for goods and services. You are free to use this image on your website, templates, etc, Please provide us with an attribution link How to Provide Attribution? Article Link to be Hyperlinked The amount is transferred from that account to the payee after the presentation, given the availability of funds of the issuer. In contrast, a certified cheque is issued by someone who has an account with the bank to favor the payee. The amount is transferred to that entity when it is presented. Difference Between Bank Draft and Certified ChequeĪ bank draft is a financial instrument issued by a bank in favor of a specified entity on the payer’s request where the bank already receives payment.
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