What is a bank draft

A bank draft is a financial instrument that allows one party to make a payment to another party, typically from one bank account to another. It is a form of payment that is guaranteed by the issuing bank, making it a secure method for transferring funds. When a bank draft is issued, the funds are withdrawn from the payer's account and held by the bank until the draft is presented for payment by the recipient. The bank draft is typically issued in the form of a paper document, and it includes details such as the name of the payer and payee, the amount of the payment, and any other relevant information. One of the key advantages of using a bank draft is that it provides a level of security for both the payer and the recipient. Since the funds are guaranteed by the issuing bank, the recipient can be confident that the payment will be honored. Additionally, bank drafts are often used for large or international transactions, as they provide a level of assurance that the funds will be transferred successfully. Overall, a bank draft is a reliable and secure method for making payments, and it is commonly used in various financial transactions, including real estate purchases, international trade, and other business dealings.