Question

A bank draft is always dishonoured if there are insufficient funds in the drawer’s account at the time of encashment.

Options

• True

• False

Answer 1

False

Explanation:

A bank draft is an unconditional order issued by a bank as the drawer, essentially a pre-funded financial instrument that guarantees payment. Unlike a personal cheque, the draft cannot be dishonoured owing to inadequate funds because the purchasing customer pays the whole amount in advance.