The Demand Draft (DD), a popular financial instrument for transfer of funds or payment till recently, is losing its sheen.
Banks are seeing a significant dip in the requests for issue of DDs, thanks to use of electronic mode of transfer and net-banking facilities.“The issue of DDs in banks is showing a 50 per cent decrease of late.
The use of DDs were inevitable till three-four years ago for payment of fees for recruitment tests, academic exams and Government transactions.
“On an average, a bank branch used to issue 300-500 DDs a day earlier. Almost all major recruiters such as Public Service Commissions, banks and some academic institutions have now switched over to online payments making the DDs almost obsolete.
The expanded use of National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) also made DDs less popular.
“Many businessmen are using the electronic mode now as it is faster. There is no blocking of funds. Clearance of DDs may take up to 10 days in some cases,''
Then, there is also a cost factor. The RBI had advised banks to reduce commission on DDs as early as 2007 though commission/service charges continue to be on the ‘higher' side, according to experts.
As of now, commission for issue of DD up to Rs 10,000 is around Rs 50. For Rs 1 lakh it is upwards of Rs 400. Banks are not forthcoming to share exact numbers on the dip in overall revenue due to decreased demand for DDs.
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