Top News

Generally, people assume that upon an individual's death, all their banking transactions cease immediately, and funds can only be withdrawn once the necessary legal formalities have been completed. This is why most people view checks, cash, and bank transfers through the same lens, assuming that identical rules apply to every mode of transaction. However, the reality is that the banking system contains certain regulations that diverge significantly from common perception—rules about which a lack of awareness often leads people to make erroneous decisions.

In fact, people often conflate checks with demand drafts, whereas the operational status of these two instruments differs vastly following the death of the account holder. While a check becomes instantly invalid, a demand draft, in a sense, remains "alive," and the bank is legally obligated to honor its payment under all circumstances.

**Why Does a Demand Draft Remain Valid?**

A demand draft is regarded as an unconditional promise issued by the bank itself. When you procure a demand draft, the corresponding amount is debited from your account immediately, and the liability for that sum shifts to the bank. This implies that the bank is now legally bound to make the payment to the specific individual in whose name the demand draft was issued. Consequently, even if the person who purchased the demand draft passes away, the bank cannot withhold the payment.

**Why Does Payment Halt in the Case of a Check?**

This constitutes the most significant distinction between a check and a demand draft. With a check, the funds are intended to be drawn directly from your personal account, with the bank merely acting as an intermediary. If the individual who issued the check passes away—and the bank is duly notified of this event—the bank will immediately halt the payment of that check. Subsequently, a formal legal process—such as the submission of a Succession Certificate—must be undertaken to withdraw the funds.

**What to Do If You Need to Cancel a Demand Draft?**

It often happens that a demand draft fails to reach the intended beneficiary for whom it was created. If the purchaser of the draft passes away during this interim period, the situation can become somewhat complex. In such instances, the legal heirs of the deceased individual may approach the bank to request the cancellation of the demand draft. To do so, they are required to submit documents such as a Death Certificate, relevant succession-related papers, or an Indemnity Bond. Upon verification of these documents, the bank will refund the money. 

Demand Drafts Are Not Valid Forever Either
Although a Demand Draft is considered safe and reliable, it too has a time limit. Typically, a Demand Draft remains valid for only three months from the date of issuance. If payment is not collected within this period, the Demand Draft becomes stale and must be revalidated.

Disclaimer: This content has been sourced and edited from News18 Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.