First things first!
While availing many services in India such as insurance, Demat account, ECS, product purchase on EMIs, bank account opening and more, a cancelled cheque is needed.
If you don’t know what a cancelled cheque is and how to cancel a cheque, then you may find this short post answering your queries. Read on!
What is a cancelled cheque?
As the name suggests, a cancelled cheque is cancelled and can’t be used for any financial transactions. Yes, when you draw two parallel lines diagonally on the cheque and write the word ‘cancelled,’ then it becomes a cancelled cheque.
What is the actual meaning of a cancelled cheque?
A user whose bank account is active with a bank has its name written on the cancelled cheque. Generally, you are not required to sign a cancelled cheque. But in some circumstances, your bank and other service providers may ask you to sign on it. You can issue the cancelled cheque to anyone or the bank as needed.
A cancelled cheque works as proof that you are the actual owner of the bank account. It even classifies the provided account with the bank.
A cancelled cheque contains information such as bank name, account holder name, IFSC Code, account number and MICR Code.
What is the method of issuing a cancelled cheque?
It is dead easy to issue someone a cancelled cheque, have a look:
- Take a cheque leaf from your cheque book
- Use a black or blue ink pen and write the word ‘cancelled’ on it diagonally after drawing two lines parallel. These two lines should be far so that there is a space available for writing the word ‘cancelled.’
- As stated, write the word;’cancelled’ in the space available between two parallel lines. You will need to write the word ‘cancelled’ in bold and Capital letters. You are also free to use sentence case. You can write it as ‘CANCELLED,’ or you can write in sentence case as ‘cancelled.’
Do you need to sign a cancelled cheque?
Since a cancelled cheque has got no monetary value, which means that it can’t be used to receive or send money; there is no need to sign it. On the other hand, if someone or a bank asks you to sign on it, you should ask the purpose of doing that. Overall, it is fine to sign such a cheque as it bears no financial value at all.
You should ask for the reason for the signing of a cancelled cheque. And the same should be provided to you in the letterhead of the company. You should ensure that the cheque bears the cheque number and other details.
What are the uses of a cancelled cheque?
The basic purpose of submitting a cancelled cheque is to verify that you are the actual owner of the bank. It is done for KYC needs for processing many service requests such as bank account opening, Demat account, and insurance, ECS and EMIs and more. Submission of your bank details in the form of a cancelled cheque is a process to expedite the processing of multiple financial and alike services.
Can a cancelled cheque be misused or used for fraud?
Is issuing a cancelled cheque safe? Yes, it is safe as no transaction may be possible using it. Still, frauds may be possible as it contains all details related to your bank account, especially if you sign on it. Thus, to avoid fraudulent activities, don’t sign it and even if you must, take in writing why you are being asked to sign it.