BANK DRAFTS - 8123

Bank drafts are payment instruments used by authorized agencies/departments to purchase goods and services under certain circumstances (see SAM Section 8123.2). Vendors who accept bank drafts, deposit them in their bank as they would checks. The bank drafts are then delivered through the banking system to an agency/department’s contracted bank for payment.

Prior to being redeemed by the agency/department’s bank, the bank drafts are delivered to the agency/department for review. The contracted bank pays all bank drafts not rejected by the agency/department within 24 hours after delivery to the agency/department. The contracted bank pays for the bank drafts out of a special agency/department account it maintains.

The custodian of the bank draft may be personally responsible for the amount advanced from the fund in treasury per Government Code section 822.