Banking Assignment

Difference between Bank Draft & Pay Order: Bank draft and Pay order are basically used for the same purpose, but are different from each other.

Bank draft means a type of check where the payment is guaranteed to be available by issuing bank. Typically, banks will review the bank draft requester's account to see if sufficient funds are available for the check to clear. Once it has been confirmed that sufficient funds are available, the bank effectively sets aside the funds from the person's account to be given out when the bank draft is used. Bank drafts are normally involved in transactions involving large sums of money and/or situations where trust can be an issue.

For example, someone purchasing a new car, showing up with a bank draft allows the dealership the assurance that he/she have enough money to purchase the vehicle and that his/her check will not bounce.

On the other hand, Pay order is also called as banker’s cheque. Pay order is not a Negotiable Instrument. A negotiable instrument is a document that guarantees the payment of a specific amount of money from one person to another. It is a transferable, signed document that promises the payment of the amount on demand or at a specific time. A pay order is payable on the issuing bank, that is they are applicable for payment within the city and if it is once made, a person cannot cancel the pay order if the party is in any other city. It is basically issued for local use and is payable only in that particular town.

Difference between Cash Reserve Ratio & Statutory Reserve Ratio: Cash reserve ratio (CRR) and Statutory reserve ratio (SRR) have some similarity in nature and purpose, but there are so many differences between CRR and SRR.

Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country....