Question

Distinguish between the following:
Cheque & Bank Overdraft

Answer 1

Sr. No.	Basis of Difference	Cheque	Bank Overdraft
1.	Meaning	It is an unconditional order directing the bank to pay a mentioned amount to a certain person.	It is a facility given to a current account holder to withdraw amount more than what he/she has in his/her account.
2.	Charges	There are no charges	Interest is charged
3.	Eligibility	All account holders are eligible for this facility.	Only current account holders can enjoy this facility.
4.	Dishonour	It can be dishonoured	It can never be dishonoured.
5.	Fee	No fee is charged on the issue of a cheque.	A small amount of fee is charged on the issuance of draft.
6.	Reliability	A cheque might not get cleared due to numerous reasons like mismatch of signature and unavailability of funds.	As it is issued only after the receipt of payment, it is more reliable.
7.	Aim	It aims at facilitating businessman for effecting local payments.	It aims at facilitating immediate outstation payments.
8.	Drawer	The drawer is the account holder of the bank.	A draft is the bank itself.
9.	Facility extended to	Cheque facility is extended to account holders of the bank only.	A draft facility is extended to both account holders of the bank as well as outsiders.