What is cancelled cheque?
Any cheque refers to a cancelled cheque if it has been marked with two parallel lines across the cheque and pen down with the word “Cancelled” in between these lines. Apart from this, you don’t need to sign or mention anything on the cheque. This is only for the purpose of acquiring information such as account number, account holder’s name, MICR code, name and branch name of the bank, and IFSC.
What is the use of a cancelled cheque?
You need a cancelled cheque for the following reasons.
- Stock Market / Mutual Funds: You might need a cancelled cheque while opening a Demat account. Some trading companies require you to submit a cancelled cheque for opening a trading account. It helps them to verify the bank account authenticity. Therefore, you need to submit it to complete your Know Your Customer (KYC) process.
- Equated Monthly Instalment (EMI): Financial lending organizations ask for a cancelled cheque when you buy any high-value item such as a car or home. For repayment to such organizations, you need monthly instalments (EMI) for your car loan, home loan etc. Therefore, you have to submit it as proof of your bank account.
- Provident Fund Withdrawal: Most companies ask for a cancelled cheque if you want to withdraw EPF money.
- Insurance Policies: You might require to submit a cancelled cheque for purchasing insurance policies such as an endowment plan or money-back plan.
- Electronic Clearance Service (ECS): (ECS) is another method of bulk payment transactions. It is used for periodic (monthly/ quarterly/ half-yearly/ yearly) payments of interest/ salary/ pension/ commission/ dividend/ refund by Banks/Companies /Corporations /Government Departments. For such payments bank requires a cancelled cheque.
How to make a cancelled cheque?
Cancelling a cheque is important, or it can be easily misused. If you want to cancel your cheque for any purpose, then follow these simple steps.
- Take out a fresh cheque from your cheque book (cancelled cheque leaf). Do not sign this cheque.
- Make two parallel lines accross the cheque, as shown in the figure above.
- Write the word “CANCELLED” between these two lines.
Note: Please ensure that you do not cover any important details such as the account number, IFSC code, MIRC code, name and branch address while cancelling the cheque.
That is how to make a cancelled cheque.
What Information does a Cancelled Cheque Contains?
A Cancelled cheque has a lot of information about the bank. Therefore, it is required by many companies for KYC purpose. A cancelled cheque contains the following informations.
- Account Holder’s name
- Bank account number
- IFSC
- MICR
- Name of the bank and branch details
Cancelled cheque sample
ICICI cancelled cheque HDFC cancelled cheque SBI cancelled cheque
FAQ
Yes. A cancelled cheque can be reused multiple times.
No, you do not have to mention date on the cancelled cheque. You don’t have to mention anything except for cancelling the cheque.
No. You don’t have to sign your cancelled cheque.
No. A cancelled cheque can not be used for any transection.
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