Commercial Applications
Distinguish between cheque and overdraft.
OR
Give any five differences between Cheque and Bank Draft.
Answer
Distinction between Cheque and Bank Draft
| S.No. | Basis of Distinction | Cheque | Bank Draft |
|---|---|---|---|
| 1. | Drawer | A cheque is drawn by a person (account holder). | A bank draft is always drawn by a bank. |
| 2. | Bearer | A cheque can be drawn payable to bearer. | A draft cannot be made payable to bearer. |
| 3. | Charges | The person who receives the payment has to pay collection charges. | Commission is paid in advance by the sender of 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, so there is no question of dishonour. |
| 5. | Stop payment | The payment of a cheque can be stopped by giving a written notice to the bank. | The payment of a bank draft cannot be so easily stopped. |
