Studying abroad can be an exciting adventure that comes with the responsibility of managing international payments. To avoid confusion when dealing with different currencies, the Foreign Currency Demand Draft (FCDD) helps you. It is a special type of check but for international transactions. FCDD is a prepaid document issued by your bank in a foreign currency, guaranteeing a specific amount of money to the recipient. To know about the benefits, how it works, and fees, continue reading further.
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What is the Foreign Currency Demand Draft?
A foreign currency demand draft is a negotiable financial statement/bank draft used by banks to facilitate payment. A foreign demand draft (FDD) is used by a customer to send money from the domestic bank to an international bank account. As a result, it is also known as the foreign exchange demand draft.
Similar to a demand draft, a foreign exchange demand draft is drawn on behalf of the beneficiary. It can be used to make several kinds of payments. A foreign demand draft can be purchased at a commercial bank.
- They are a safe way to send money abroad, as the funds are guaranteed once the draft is issued.
- FCDD are widely accepted by international banks, making them a reliable payment option.
- You have control over the exact amount being sent via an FCDD.
Top Banks offering FCDD Services
While many banks offer FCDD services, one of the top banks providing seamless services is Bank of America. Other banks include HSBC, Citibank, JP Morgan Chase, and DBS Bank. Some Indian banks are-
- Axis Bank
- ICICI Bank
- HDFC Bank
Benefits of the Foreign Demand Draft
Thankfully, there’s a solution that offers both security and convenience to international money transfers- the foreign currency demand draft (FCDD). But what exactly makes FCDDs so advantageous for your cross-border transactions? Explore the benefits of the Foreign Demand Draft in this section-
- Foreign demand draft cannot be misused as the details of the beneficiary are required to make the payment
- FDD can be issued in several currencies including USD, EUR, AUD, and GBP, among others
- The customer has to make a minimum amount of fixed fee, and applicable service tax. Hence, it is a low-cost option.
- It allows the individual to withdraw any amount. However, it has to be in accordance with the rules of the Foreign Exchange Management Act (FEMA).
- Lastly, it provides a fast and hassle-free remittance solution for customers
Also Read: Thinking about sending money internationally? Know all about the best ways to send money internationally with the best platforms.
How Does it Work?
Foreign Currency Demand Draft offers a secure and straightforward solution. You need to visit your bank and inform them about your intent to purchase an FCDD. Specify the details and tell them the amount you want to send and the desired foreign currency.
- A bill of exchange is a written statement that binds a party to pay a fixed amount to another party at a predetermined date/on demand.
- A bill of exchange would become the bank draft, a credit instrument where the bank that is issuing the money guarantees payment.
- It is done after making sure that the issuing account has the amount of money that it wants to send.
- To obtain a bank draft it is essential to submit the depositing money to equal to the check amount. Moreover, fees are applicable for the same.
- FDD is used when it becomes expensive to obtain the foreign currency required for an international transaction. FDD helps in establishing credit accounts in that country.
- Later, it is denominated in the local currency and is used for payment.
- Next, the sender can pay back the money to the bank in the local currency.
- However, fees and exchange rates matter. Hence, FDD is a useful tool that facilitates international transactions.
Also Read: Check this blog and learn all the differences between international wire transfers and forex card transactions abroad and choose the suitable option.
Documents Required to Buy a Foreign Currency Demand Draft
Before you start with international transactions via FCDD, there are a few documents you’ll need to gather. These documents are related to identity, address, application form, transaction details, and funds.
| Documents Required |
| Visa/Passport/Ticket (Only when the purpose is travelling) |
| Application form and the declaration form under the LRS scheme |
| FEMA and FORE A2 declaration |
| Pan Card |
| Invoice/Details of the amount to be paid by the beneficiary |
Foreign Demand Draft Process
The process of the Foreign Demand Draft is simple. You can visit your bank and inform them about the amount and currency you want in the FCDD. Pay the fees associated with the processing of DD and provide recipient details. Specify the beneficiary’s name and bank account information. Now, receive the FCDD issued by the bank as a document with the specified amount and recipient details.
- Create an active saving account in a bank
- Reach out to the bank/financial institution to send the money
- Fill out the online/offline demand draft request form
- Enter the details of the recipient in the form. For example, name of the sender, location of the transferable amount, amount to be transferred, and mode of payment (Bank account/cash).
- Moreover, the details of repayment of the amount to the bank need to be mentioned.
- Next, the money will be remitted to the recipient’s bank account. A few days might be required for the same. For example, 7-28 days is the usual time.
- In case, a demand draft is lost another one can be requested from the bank
Also Read: Travelling to London for studies? Read about Currency Exchange in London and get complete information about the same.
Foreign Demand Draft: Banks and Fees
Most of the banks offer the foreign demand draft service. However, a small fixed amount has to be paid for the same. It varies on the basis of the bank. Here is a list of a few banks offering the FDD service.
| Bank Name | FCDD fee |
| Axis Bank | INR 500+ Service tax |
| HDFC Bank | INR 200- INR 500 (depending on the transaction amount) |
| Orient Exchange | INR 500 |
FAQs
Yes. It is possible to get a bank draft in a foreign currency.
Some of the benefits of the foreign draft include faster deposits, a fixed conversion rate, and no risk of bounced checks.
Foreign currency demand drafts are often used when smaller amounts of transactions have to be made. They are even used in situations where timely delivery is important.
For example, tax payments, rent payments, and tuition payments. Several industries also prefer the use of payment by-demand drafts like the music industry and real estate industry.
While many banks offer FCDD services, one of the top banks providing seamless services is Bank of America. Other banks include HSBC, Citibank, JP Morgan Chase, and DBS Bank. Some Indian banks are Axis Bank, ICICI Bank, and HDFC Bank.
The process of the Foreign Demand Draft is simple. You can visit your bank and inform them about the amount and currency you want in the FCDD. Pay the fees associated with the processing of DD and provide recipient details. Specify the beneficiary’s name and bank account information. Now, receive the FCDD issued by the bank as a document with the specified amount and recipient details.
FDD is a negotiable instrument used by banks to make international payments. FDD is used to send money to another country. It helps in mitigating the effects of the exchange rates, and bank routing delays. Moreover, it is a cheaper and more efficient way of sending money.
To know more about forex, education loans, the best bank accounts for students, banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
