Demand Draft Fraud Law and Legal Definition

Demand draft fraud refers to a type of fraud in which the dishonest bank employees, who know the coding and punching of a demand draft (DD), will remove a few demand draft leaves or DD books from the stock of a bank and then they will write on such DD so that it looks like a regular DD. Subsequently these demand drafts will be issued to a distant town/city without debiting an account for payment. Since for the paying branch it is just another DD, such DD will be cashed at the payable branch.

Generally, a demand draft will be discovered only after six months when the head office does the branch-wide reconciliation.