Are You Know How to Cancelled Cheque? When it comes to traditional banking, a cheque is a crucial part. Due to advancement in technology and growth of internet banking, now people prefer to transfer money online, pay the bill via internet banking, etc. Everything is just a click away and superfast.
However, cheques are still used by people who don’t prefer online money transfer and opt for a comfortable payment option. A cancelled cheque is used to authenticate a valid bank account.
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A cheque contains various important information like the account number, IFSC code, cheque number, account holder’s name, etc. Hence, it can be misused if it is not cancelled and crossed. A cancelled cheque is very helpful in various cases like setting up a fund, opening a new bank account, insurance and lot more.
What Is A Cancelled Cheque?
A cancelled cheque looks similar to a regular one, but it is crossed with two lines and the term “Cancelled” is written across the cheque, it works as a proof that the person who has this cheque submitted manages a working account with the bank. It is not mandatory to sign a cancelled cheque. The primary purpose to cancel the cheque is that any of the critical details does not get misused.
Information Available On A Cancelled Cheque
- Account Holder’s Complete Name
- Bank Account Number
- Bank Name
- Name of Branch
- IFSC Code
1: Benefits Of Cancelled Cheques
1. A cancelled cheque works as proof. It means you hold an operational bank account in certain bank. It is highly accepted in all leading financial institutions as an authentication.
2. It works as a proof to process KYC, open an account, PF withdrawal, etc. A canceled cheque contains important information like IFS code, bank account number, branch name, account holder’s name, etc.
3. The same cancelled cheque can be used more than once.
2: The Need for Cancelled Cheque
A cancelled cheque is majorly used for bank transactions, here are some of the common uses of a cancelled cheque.
1. KYC Processing
A cancelled cheque is needed to process the KYC and for documentation, if you are planning to invest in the market in the form of stocks or mutual funds, KYC needs to be done and the financial institution asks you to validate your banking details by submitting a cancelled cheque.
2. Buy Insurance
A cancelled cheque is mandatory to submit when you buy a new insurance policy that includes health plan, child plan, education plan, term plan, etc.
3. Opening of A Demat Account
If you are planning to invest in good stocks you must have a Demat account. While opening a new Demat account, you need to submit a cancelled cheque along with the needful form, address proof, ID proof etc to validate KYC process.
4. Setting Up Electronic Clearance Service
A cancelled cheque is required for Electronic Clearance Service, the details ensure your bank account is deducted regularly with an amount.
5. Pay EMI
It is necessary to submit a cancelled cheque in your bank to finish the processing of EMI once the loan is approved. A cancelled cheque is required to process all type of loans like education loan, home loan, car loans, etc.
6. Withdrawal of EPF
Salaried individuals also need to submit cancelled cheque along with necessary withdrawal form to withdraw money from their respective EPF account. The cancelled cheque helps to validate the bank account details from which the amount is credited.
How To Cancel A Cheque?
To cancel a cheque, you must be the legal authority and owner of the bank account. Take the cheque and draw two parallel lines with a blue pen across the cheque. Write “cancelled” between the two lines. It is not mandatory to sign a cancelled cheque, it is only needed to provide important banking information like IFS code, bank account number, branch name, account holders name, etc.
While cancelling a cheque use a blue or black ballpoint pen. Any other colored pen will not be termed as valid. In addition to it, it is mandatory to write the word “Cancelled” between the parallel lines so that the cheque is not misused by anyone. Moreover, the cancelled cheque does not hold any monitory value.
FAQ About Cancelled Cheque
Ques: Do I need to sign a cancelled cheque?
Ans: A cancelled cheque does not need any signature, make sure you have written “Cancelled” across the cheque to authenticate it as a proof of your bank details.
Ques: Need of a cancelled cheque?
Ans: cancelled cheque is needed to open a demand account, buying insurance, processing of KYC, etc.
Ques: Can I cancel the cheque using a red pen?
Ans: A cheque should be only cancelled with a blue or black ballpoint pen. Avoid using colorful pens to write a cancelled cheque.
Ques: Do I need to get a cancelled cheque from my bank?
Ans: You must have a valid cheque leaf to cancel it. Firstly, apply a checkbook from your bank and then cancel the cheque leaf by crossing the cheque with 2 parallel lines and mention the term “Cancelled”.
Things to Avoid While Cancelling A Cheque
- Never fill the cancelled cheque with any details that include the date and signature.
- Cross the cheque on the top right corner with two parallel lines and write the word “Cancelled” in between.
- Avoid using any colored pen or pencil while cancelling the cheque. Use only blue or black pen.
- Do not mention the date in a cancelled cheque.
- A cancelled cheque cannot be used for making any financial transaction.
- Never sign a cancelled cheque.
No one can withdraw the money using a cancelled cheque, to rule out the chances of fraudulent activities, make sure you don’t sign your cancelled cheque or mention any date. Additionally, make sure the people to whom you are handing your cancelled cheque must be trustworthy. A cancelled cheque is a method to authenticate your bank details and at the same time, no one can misuse the cheque and do any fraudulent activity.