A bank draft is a payment instrument issued by a bank, guaranteeing the payment amount to the recipient. It is created when a customer requests the bank to withdraw funds from their account and transfer them to another party. This makes bank drafts a secure method of payment, as the funds are guaranteed by the bank itself. Unlike personal checks, which can bounce if there are insufficient funds, bank drafts are considered more reliable. They are often used for large transactions, such as real estate purchases or business deals, where assurance of payment is crucial.