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Your FAQs on Cancelled Cheque – What, Where and Why it is Needed

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Your FAQs on Cancelled Cheque – What, Where and Why it is Needed

Cheques are considered as one of the popular and conventional methods of making a transaction in India. However, with the advent of technology, transactions can also be done these days with only a few clicks and taps on a computer and smartphone. 

Nonetheless, the use of cheques is accepted among people who are doubtful of online methods or without the know-how of using it. Cancelled cheques are utilized by people as proof of being the account holder of that specific bank account. 

Hence, if you wanted to know more about the cancelled cheque, then you may find this article useful. Know more as you read on!

 

What is a Cancelled Cheque?

Once a cheque is cancelled by drawing two lines across it with the word ‘cancelled’ written between two lines, then a cheque is known to be cancelled. 

 

How to Cancel a Cheque?

Many people don’t know how to write a cancelled cheque, but it is easier to do that. All that you need to do is strike two lines across the cheque and write ‘cancelled’ across it. There is no need to sign a cancelled cheque. It is only to ensure that you own the account of the issued cheque. Many details such as the name of the account holder, branch name and address, account number, IFSC, and MICR Code are available on it. It means that it has enough information to ascertain your bank account details and that it belongs to you. 

 

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What are the Uses of a Cancelled Cheque?

Cancelled cheque may be used for many purposes – opening a bank account, availing loans, purchasing products on EMIs and more. Have a look at the following most prevalent uses: 

  1. When you decide to avail of a loan such as personal loan, home loan, car loan and more, then the bank may ask you to submit a cancelled cheque. 
  2. If you want to avail EMI on any preferred products and consumer durable loan from a bank or non-banking finance companies (NBFC), then a cancelled cheque may be required. 
  3. While investing in mutual funds, investment organizations highlight validating the KYC details of the customer. Thus, to verify your account details, you will be needed to submit a cancelled cheque. 
  4. If you want to withdraw your provident fund (PF) via the offline method, then it becomes a must to submit the details of your bank account that you have. And the best method to do that is by submitting along with other documents. It is only to convince the party that the bank account belongs to you and not anyone else. 
  5. You may also be required to submit a cancelled cheque if you are want to register for Electronic Clearance Service (ECS). It is to know that you are the actual account holder so that an amount gets debited from it automatically. 
  6. A cancelled cheque may also be needed by insurance service providers while buying an insurance policy. 

 

Is it good to use a red pen to cancel a cheque?

You should ensure to use only a blue or black pen to cancel a cheque as any other colour will not be accepted. 

 

Are there any risks related to a cancelled cheque?

Nothing as such! It is because a cancelled cheque can’t be utilized to withdraw money from your account. 

You are now aware of some basics of a cancelled cheque so that you can use it even more confidently while availing of many financial services in India. You can ask your bank to provide you with free of cost cheque leaves if you have not got or finished.  

 

 

Read more Business related stories in The Weekly Trends magazine.

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