What is a Cancelled Cheque? Uses of a Cancelled Cheque
If you have a bank account, then this information is very important for you. Because in today’s article, we are going to see in detail what a cancelled cheque is, how to prepare a cancelled cheque, what is the correct method, and when, where, and why a cancelled cheques is required.
Nowadays, many institutions, banks, and financial companies ask you for a cancelled cheque. But due to lack of proper knowledge about how to make a cheque correctly, many times cancelled cheques are misused, and in some cases, money is also withdrawn from the bank account.
If you currently need to make a cancelled cheques or feel that you may need a cancelled cheques anytime in the future, then this information will be very useful for you. Because if you do not know the correct way to prepare a cancelled cheques, you may face fraud.
What is a Cancelled Cheque?
A cancelled cheque is a normal cheque. On the cheque you have, two bold parallel lines are drawn, and the word “CANCELLED” is written on it. This is called a cancelled cheques. Nothing should be written on it except “CANCELLED”. There is no need to sign it either. The only reason for writing “CANCELLED” is to ensure that no one can misuse that cheques.
You can submit a cheque from any bank as a cancelled cheques. Based on this cancelled cheques, a financial institution or bank can get complete information about your bank account, such as account number, IFSC code, customer ID, branch address, MICR code, etc.
Uses of a Cancelled Cheque
For investment:
If you want to invest in the market, such as mutual funds or the share market, then you need to complete KYC. For this, a cancelled cheques is required.
To open a bank account:
If you want to open a new bank account in another branch, then a cancelled cheques may be asked for. It can be used as proof.
For loans:
If you take a loan from a bank, you have to submit a cancelled cheque to the bank. For KYC and to start loan EMI or ECS, a cancelled cheques is required by the bank.
For payments:
Many times, you need to receive different types of payments from companies. In such cases, if online payment is to be done, the company may ask for a cancelled cheques.
Insurance policy:
Many times, while taking an insurance policy from an insurance company, you are required to submit a cancelled cheque.
To withdraw PF amount:
A part of the salary of government and private employees is deposited in the provident fund. If you want to withdraw this provident fund amount, you can use a cancelled cheques to request the money in that account.
How to Make a Cancelled Cheque?
If you draw two slanting or parallel lines on a cheques and write “CANCELLED” in English between them, that instrument is considered a cancelled cheques.
While preparing a cancelled cheque, carefully follow the points given below:
- Take a new cheque from the cheque book
- Draw two horizontal or slanting lines in the middle of the cheque
- Write “CANCELLED” in capital letters between those lines
- Do not sign anywhere on the cheque
- Draw a line in the amount field so that no amount can be written
- Do not write anything in the date field
- Do not write anything on the back side of the cheque (only if required, you may write “For Cancelled Cheque Only”)
- It is not mandatory to sign on a cancelled cheques. Even if someone asks for a signature, do not sign it.
Important Instructions
- Give the cheque only to a trusted institution or bank
- If possible, provide a scanned copy
- The same cheque scan can be used at multiple places
- Uploading a cheque along with online documents is safer
- This greatly reduces the chances of fraud
Conclusion
A cancelled cheques is a very important banking document. If prepared in the correct manner, it is accepted, and the security of your bank account is also maintained. By keeping small things in mind, you can protect yourself from major frauds.