Remittance and Clearing

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What is Demand Draft (DD)

A Demand Draft (DD) is a financial instrument issued by a bank

on behalf of a customer, allowing the customer to make a
payment to a specific beneficiary or payee. It is essentially a
prepaid negotiable instrument, similar to a check, but unlike a
check, it is guaranteed by the issuing bank.
Key Characteristics of a Demand Draft
 Issuance: A DD can be obtained from a bank by providing
funds equivalent to the amount to be paid plus applicable
charges. The issuing bank then issues the DD on behalf of the
customer.
 Payment to Specific Payee: The DD specifies the name of
the beneficiary or payee to whom the payment is to be made.
 Prepaid Instrument: The funds for the DD are paid upfront by
the purchaser to the bank issuing the DD.
 Safety and Security: Since a DD is issued by a bank, it is
considered a secure mode of payment. The payment is
guaranteed by the issuing bank, ensuring that the beneficiary
receives the specified amount.
Key Characteristics of a Demand Draft

 Validity Period: Typically, a DD is valid for a certain period,

often around three months from the date of issue. After this
period, it might require revalidation or renewal.
 Cancellation and Reissuance: If a DD is lost, stolen, or
needs to be canceled for any reason, the purchaser can
request the issuing bank to cancel the existing DD and issue a
new one after following the required procedures, such as
obtaining an indemnity bond.
 Uses of Demand Draft
 Secure Payment: Often used for making secure payments for
various purposes, including paying bills, fees, making
investments, or conducting business transactions.
 Remittance: Used for transferring funds from one location to
another, especially when the parties involved do not have
accounts in the same bank.
 Education and Investments: DDs are commonly used for
paying educational fees, making investments, or for purchasing
financial products.
 Demand Drafts are a reliable and secure way to make
payments, especially when there's a need for certainty and
safety in financial transactions.
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 Dos and Don’ts
Do’s Don’ts
Applications for DDs are signed by the purchasers Do not Pay DD of more than Rs. 20,000/- in cash.
KYC of applicants in case of DD for amounts equal to Do not Accept partially filled form
or above Rs 50000/-, including commission/exchange,
is taken.
Guidelines must be followed while issuing duplicate Do not Issue duplicate DD without accepting
DDs. Indemnity bond (as per guidelines).
DDs for Rs. 50000, inclusive of commission/exchange, Do not Issue duplicate DD without hot listing the Old
and more are issued against debit to the customer’s DD
account/cheques or other instruments tendered by the
customer.
Stock of Blank Draft forms when received at a Branch, Do not Forget to note down key number in application
must immediately be counted and checked thoroughly form after printing DD
leaf by leaf .
The sticker on the amount (Figure) to be affixed. In No DD for amount equal to or beyond Rs 50000 be
CBS system, HDDPRNT menu option is used to print issued in cash.
the DD.
In case of any instrument issued by the Branch
requires correction, the Branch would cancel the
incorrect instrument and issue fresh DD. 6
 RTGS & NEFT
RTGS (Real Time Gross
Settlement) and NEFT
(National Electronic Funds
Transfer) are electronic
payment systems used in
Bharat for the seamless
transfer of funds between
bank accounts maintained at
different financial institutions
across the country. 7
 RTGS : Features
 Real-Time Settlement: RTGS is a system that facilitates real-
time transfer of funds on a gross basis, which means the
transactions are settled individually and immediately without any
bundling with other transactions.
 Minimum Transaction Amount: RTGS is primarily used for
high-value transactions. There is a minimum amount of RS. 2
lakhs for transactions initiated through RTGS, set by the Reserve
Bank of India (RBI).
 Transaction Timings: The service is available round the clock
24*7 and 365 days.
 Immediate Transfer: Once the request for an RTGS transaction
is initiated and processed by the bank, the funds are instantly
credited to the recipient's account.
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 NEFT : Features
 Deferred Settlement: NEFT operates on a deferred settlement
basis, wherein transactions are processed in batches and settled
in 30 minutes slots, unlike the instantaneous settlement in RTGS.
 Minimum Transaction Amount: NEFT can be used for both
small and large value transactions, and there is no maximum
threshold amount for NEFT transactions. The minimum transfer
value is Rs. 1.
 Transaction Timings: The service is available round the clock
24*7 and 365 days.
 Settlement Time: The settlement in NEFT occurs at
predetermined intervals throughout the day, and the transactions
may take some time to reflect in the recipient's account.
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 Dos and Don’ts
Do’s Don’ts
Check the signature in the form. Do not accept partially filled forms

Form should be complete in all respect. Do not accept NEFT/RTGS/IMPS without Debit
mandate
Complete the transaction within reasonable time after Do not keep the transactions pending
receiving the form.
Carefully check the account number and IFSC code. Do not be casual in checking the details entered in
the system
Carefully check the IFSC Code,
Enter Mobile No./address/email ID properly.

Enter Sender to Receiver information properly

Whether charges have been collected?

Be careful if high value transactions are undertaken in

newly opened account

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 Clearing
Collection and scrutiny of cheques in Bharat involves a
series of procedures and checks conducted by banks to
ensure the authenticity, validity, and compliance of cheques
presented for clearing. Here is an overview:
 CTS Compliance (Cheque Truncation System):
Cheques processed under the CTS system are checked for
compliance with the specifications set by the Reserve Bank of India
(RBI) to ensure standardization, security features, and image-based
processing.
 Validity and Date:
Banks check the validity period of the cheque, ensuring it is presented
within the specified timeline.
They also verify if the cheque is post-dated or stale (presented after
the expiry date).
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 Clearing
 Completeness and Correctness:
The cheque is scrutinized for completeness, ensuring it contains essential
details such as date, payee name, amount in words and figures, signature,
etc.
 Security Features:
Banks examine security features present in CTS-compliant cheques,
including watermarks, security threads, microtext, etc., to confirm
authenticity.

 MICR Line Verification:

Magnetic Ink Character Recognition (MICR) line on the cheque is scanned
to verify the accuracy of the printed information, such as the account
number, branch code, and cheque number.

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 Clearing
 Crossing and Endorsement:
Banks ensure cheques are crossed, indicating they are non-negotiable or
payable only through a bank account.
Endorsements on the reverse side are examined to verify the legitimacy of the
transfer.

 Telephonic Confirmation:
For high-value cheques or when discrepancies are observed, banks may
conduct telephonic confirmation with the account holder regarding the
issuance and details of the cheque.

 Alterations and Material Changes:

Any material alterations on the cheque, except those for the date, are closely
examined and may lead to rejection.
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 Clearing
 Payee Details:
Information related to the payee, such as name, account number, mobile
number, etc., is verified on the cheque and accompanying pay-in slip.

 UV Lamp and Magnifying Glass:

 High-value cheques may undergo scrutiny under UV lamps and magnifying
glasses to detect any tampering or fraudulent activity.

 Cheques accepted after scrutiny are processed through clearing

operations, where they are sent to the respective banks for payment
or credit to the account.

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 Clearing
 Banks maintain records, register the cheques, and reconcile the
transactions at the end of each clearing session.

 Any cheques returned due to insufficient funds, mismatched

signatures, or other issues are marked, and the reasons for non-
payment are communicated to the presenting bank.

 The process also involves handling returns, if any, and following the
standard procedures for returning dishonored cheques to the
customers within specified timelines.

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 PPS: Positive Pay System
 As per the concept of PPS, all cheques of amount Rs. 5 lakh and
above have to submit details through Positive Pay System .
 The issuer of cheque for all account holders has to submit the certain
details of cheque like cheque number, cheque alpha, cheque
amount, cheque date, beneficiary name in Positive Pay System.
 The details of cheque submitted through Positive Pay System is
being cross checked with the presented cheque by CTS.
 If any discrepancy is flagged by CTS to the drawee bank and
presenting bank, the concerned bank takes redressal measures.
 The facility of Positive Pay System (PPS) is available through
branch, Internet Banking (IBS- Retail & Corporate), PNB ONE, SMS
and through PNB Corporate Website.
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 Do’s and Don’ts
Do’s Don’ts
Ante dated cheques should be paid if they are not Post Dated cheques cannot be paid before the due
stale. date.
Telephonic confirmation should be obtained for Cheques having material alteration should not be
cheques of Rs. 2 Lakh and above. paid.
Cheques drawn in different inks, scripts and Cheques which have crossed their validity period
handwritings should be paid if otherwise in order and should not be paid and be sent for revalidation
if the drawer’s instructions are readable and
understandable.
Cheques should be CTS compliant. Don’t process any instrument which does not
conform to the image specifications.
Inward Cheques of Rs.1 Lac & above should be Cheques should not be undated.
processed through Magnifying glass cum UV Lamp.
All Outward Cheques irrespective of amount should
be processed under UV Lamp.
The dishonoured cheque be entered in the Cheque
Returned Register and handed over along with the
duly signed and dated Cheque Returning Memo to
the presenting bank on the same day / next day.
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