Multiple choice

Which of the following is incorrect about demand draft?

  1. It is the type of cheque.

  2. It is the medium of account clearance.

  3. In the case of demand draft, the bank is the drawer.

  4. The principles of cheque clearance do not apply to demand draft.

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Demand draft is a negotiable instrument issued by banks, and while similar to cheques, it has distinct characteristics. In a demand draft, the issuing bank is the drawer, and it serves as a medium for account clearance between banks. Cheque clearance principles DO apply to demand drafts in terms of presentment, payment, and clearance processes, making option D the incorrect statement it claims to be.

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