Bank Draft/Cheque

A bank draft is a check, drawn by a bank against its own funds deposited in another bank. This is a document wherein the owner of the cheque allows the person written in the document to withdraw money for various reasons. The cheque was first used in the middle of 19th century and eventually a law was passed to govern this type of transaction in 1882. Other US laws that govern this type of transaction was passed in 1957 and 1992.

When compared to other methods of transaction, Bank Draft Cheque usually take days to clear. Although there are cheques that could clear within 24 hours or could be done online, most offline cheques will be cleared within 3-5 business days depending on the bank. The main reason for this is that banks usually take time to clear the cheque to ensure that the issued document is legal and should be acknowledged.