AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A personal cheque is your order to your bank, so it can bounce if your account is short. A bank draft is drawn by the bank on itself, so the money is taken from your account before it is issued and the risk of non-payment is the bank's. Drafts suit payments where the payee wants certainty, such as fees or deposits; both clear as paper and are subject to the ₦10 million clearing cap.
What each one is
A cheque is defined in section 73 of the Bills of Exchange Act as a bill of exchange drawn on a banker payable on demand. You are the drawer; your bank pays from your account if the money is there.
A bank draft (also called a banker's draft or, at many banks, a manager's cheque) is drawn by the bank itself. The Act recognises it in two places: its definition of "prescribed instrument" in section 2 includes "a draft drawn by a banker upon himself and payable on demand at an office of his bank", and section 60(2) treats a banker's draft payable on demand at the head office or a branch in Nigeria as a bill for the purposes of that section. You pay the bank first, and it issues an instrument backed by its own funds.
Side by side
| Point | Personal cheque | Bank draft |
|---|---|---|
| Who promises to pay | You, through your account | The bank |
| Can it bounce for lack of funds? | Yes, and that can be an offence under the Dishonoured Cheques Act | Not for lack of funds in your account; you have paid already |
| When your account is debited | When the cheque is presented | When the draft is issued |
| Cost | Cost of the cheque book (cost recovery under the CBN Guide, item 11.16) | A draft or manager's cheque fee set in the bank's tariff |
| Clearing | Paper clearing, next working day (T+1) | Paper clearing, next working day (T+1) |
| Clearing cap | ₦10 million per instrument | ₦10 million per instrument, as we read the rules |
| Stopping it | You can countermand a cheque (s.75) | Harder; the bank usually needs the original back or an indemnity |
We did not find a CBN-capped price for issuing a bank draft in the Guide items we checked. Ask your bank for the fee, and whether it is charged per draft or by value, before you request one.
When institutions ask for a draft
Some schools, embassies, courts, government agencies and property sellers ask for a draft because they want certainty: a personal cheque from a stranger might bounce, while a draft carries the bank's promise. Fewer institutions insist on drafts than in the past, as transfers have become the norm, so ask whether a transfer to the official account is accepted.
Worked example
Example only. Chioma must pay a ₦600,000 deposit to a law firm's client account. Option one: a personal cheque, which the firm will not treat as paid until it clears the next working day, and which could be returned if her account is short. Option two: a bank draft, for which her bank debits ₦600,000 plus its draft fee at issue; the firm receives a bank instrument but still waits for it to clear. Option three: a transfer of ₦600,000, which arrives in minutes; at the 2020 maximum her bank could charge ₦50 plus VAT (₦53.75), and the ₦50 stamp duty applies, for ₦103.75 on top. The firm gets cleared funds the same day.
Risks with drafts
- Fake drafts circulate. A payee should confirm a draft with the issuing bank before releasing goods or property, using the bank's official number, not one printed on the draft.
- A lost draft is not easy to cancel. Banks usually ask for an indemnity, and sometimes a waiting period, before reissuing.
- A draft is still a paper instrument; it can be returned for alteration, damage or a stale date.
How to get a bank draft
- Go to your branch with ID, or use the draft request option in internet banking if your bank offers one.
- Give the exact payee name as the recipient wants it printed. A misspelt name can lead to refusal.
- Make sure your account has the amount plus the fee. The bank debits both before issuing.
- Collect the draft and the bank's receipt, and photocopy the draft before handing it over.
- Ask the payee to confirm receipt and keep a note of the draft number.
Some institutions that ask for drafts specify the bank or require the draft to be payable in a particular city. Read their instructions before you go to the branch, because a draft issued wrongly usually has to be cancelled and reissued, which can cost a second fee.
Which to use
- If the payee accepts transfers, a transfer is faster and leaves a clean record.
- If the payee needs certainty and insists on paper, use a bank draft and keep the bank's receipt.
- Use a personal cheque where the payee knows you and timing is flexible, and cross it. See crossed and open cheques.
- For amounts over ₦10 million, use a transfer. See the clearing cap.
Where Pryme fits
Pryme accounts pay by transfer, with the recipient's name confirmed and fees shown before you approve. If a payee needs proof of payment, any customer can generate a verifiable receipt through VerifyDoc.ai that the payee can check is genuine; see receipts.
Questions people ask
What is the difference between a bank draft and a cheque?
A cheque is your order to your bank and can bounce. A bank draft is drawn by the bank on itself after taking the money from your account, so the payee relies on the bank, not on your balance.
How much does a bank draft cost in Nigeria?
Each bank sets its own draft or manager's cheque fee in its tariff; we found no CBN cap for it in the Guide items we checked. Ask the branch before you request one.
Can a bank draft bounce?
Not for lack of funds in your account, because you pay first. It can still be returned for alteration, damage or forgery, so payees should confirm drafts with the issuing bank.
How long does a bank draft take to clear?
Like a cheque, it is a paper instrument and is deemed paid by 10pm on the next working day under the 2018 clearing rules.
Sources
- Bills of Exchange Act, Laws of the Federation (PLAC) · accessed Oct 2026
- CBN Guide to Charges by Banks, Other Financial and Non-Financial Institutions (effective 1 Jan 2020) · accessed Oct 2026
- BusinessDay: CBN gives September 1 for revised clearing rule implementation (2018) · accessed Oct 2026
- Techeconomy: Stamp duty replaces EMTL, sender bears ₦50 (Jan 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.