What are ‘demand drafts’?


(i) Workers who receive their salaries at the end of each month have extra cash at the beginning of the month.

(ii) This extra cash is deposited with the bank by opening a bank account in their name.

(iii) Banks accept the deposits and also pay an interest rate on the deposits.


(iv) In this way, people’s money is safe with the banks and it earns an interest.

(v) People also have the provision to withdraw the money as and when they require.

(vi) Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits.

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