How is a bank draft similar to a cheque?

A bank draft is similar to a cheque in that both documents involve a drawer and a drawee that are typically the same entity. In the case of a bank draft, the bank itself is the drawer, while the drawee is also the bank, which guarantees payment. This structure provides a level of security to the recipient since the funds are already assured by the bank.

In contrast, a regular cheque is written by an individual or business (the drawer) against their account with a bank (the drawee). Because both instruments maintain this relationship of having the same parties involved, it highlights their similarity in terms of payment procedures.

Other options do not adequately reflect this connection. For example, while bank drafts can be used for international payments, this is not a defining characteristic shared with all cheques. Similarly, the ability to cancel these instruments varies and isn't a shared trait. Lastly, requiring signatures from external parties does not apply uniformly to both documents, as a bank draft often does not need the same authorization process as a personal cheque.