A Bank Draft is a secure payment option guaranteed by the issuing bank for large amounts of money.
What is Bank Draft ?
Bank Draft aids in making large payments without having to withdraw cash from one’s account. The issuing bank guarantees it, and the total amount of the draft decreases in the payer’s bank account balance. This amount is then usually held in a general ledger account until the employee cashes the draft. In addition, some banks also charge customers for drafts. This means that the requesting customer may also be liable for a fee based on the amount of the draft. A bank draft can also be defined as the bill of exchange issued by a bank.