What to Do if You Lose a Bank Draft Cheque
If you find yourself in a situation where you've lost a bank draft—also known as a banker's draft or certified check—it's crucial to take specific steps to protect your financial interests. Whether you encounter this issue with a demand draft, there are several key steps outlined in this article to guide you through the process.
What Happens When You Lose a Bank Draft?
Losing a bank draft can be a serious situation, but taking prompt action can often alleviate the potential for financial loss. Here’s a step-by-step guide on what to do:
1. Report the Loss
The first step is to contact the bank that issued the draft. Inform them of the loss as soon as possible. Provide any relevant details such as the draft number, the amount, and the date of issuance.
2. Stop Payment (If Possible)
Check with the bank to see if a stop payment order can be placed on the lost draft. Note that this might not always be possible, as bank drafts are considered guaranteed funds and some banks do not allow stop payment orders.
3. Apply for a Replacement Draft
If a stop payment is granted, the bank will typically require you to fill out a form and may charge a fee. Along with the form, you may need to provide identification and a sworn affidavit confirming the draft is lost.
Note: The bank may require a waiting period, often between 30 to 90 days, to ensure that the original draft has not been cashed.
4. Manage Potential Liability
If the lost draft is cashed before you report it, you may be liable for the amount, depending on the bank’s policies and the circumstances surrounding the loss.
5. Document Everything
Keep detailed records of all communications with the bank, including dates, names of representatives, and any forms submitted. This documentation can be crucial for any further proceedings or disputes.
6. Monitor Your Accounts
After reporting the loss, keep an eye on your bank account and any related accounts to ensure that no unauthorized transactions occur.
Important: Always check with your specific bank for their policies and procedures as they can vary between institutions.
Options When Losing a Demand Draft
Here are two options you have if you lose a demand draft:
1. Cancellation of Demand Draft
If you received the demand draft (DD) by paying cash, you must present the original DD along with the cash receipt to the bank. The bank will refund you the amount after a small deduction.
If you received the DD through a cheque, present the DD to the bank, and after the required deductions, the amount will be returned to your account.
2. Issue of a Duplicate Demand Draft
If the draft is lost, the holder can apply to the issuing branch for a duplicate draft. The bank will require security to indemnify it against any claims if the lost draft is found later.
If the purchaser is not the holder at the time of loss, the bank might ask for indemnity from the holder. There will be a constructive delivery of the draft to the payee once it is posted by the purchaser, and the purchaser has no right to ask the drawee bank to stop payment on the ground of absence or failure of consideration.
Under such circumstances, the purchaser's remedy may lie elsewhere, such as proceeding against the payee for breach of contract or initiating criminal proceedings if fraud is suspected.
Conclusion
Losing a bank draft can be a worrying experience, but by following the steps outlined above, you can minimize the risks associated with the loss. Always be proactive and contact your bank immediately to safeguard your financial interests.