Banking · Banking Instruments
Why can a bank not issue a demand draft payable to the bearer?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Because RBI has banned the use of bearer cheques
- 2Because bearer drafts are prohibited under the Income Tax Act
- 3Because only the government can issue bearer instruments
- 4Because bearer drafts would act like currency notes, violating Section 31 of the RBI Act, 1934✓
Correct answer
Because bearer drafts would act like currency notes, violating Section 31 of the RBI Act, 1934
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