Definition of Banker’s Draft: A banker’s draft is a type of cheque underwritten by the customer’s bank such as Natwest, HSBC or Halifax. With an ordinary cheque, the recipient has no guarantee that it will clear. Bounced cheques could be very bad if you are selling an expensive item. Therefore, a Banker’s draft overcomes this problem because basically, the Bank is saying funds are cleared and the Bank will honor the cheque.
Banker’s Draft Fraud
Like any other type of cheque there is the possibility for fraud. If in doubt, take advice from the bank in question.
In the UK, banker’s drafts are on the decline, following a corresponding decline in cheques as people switch to alternative forms of payment.