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What is a Cancelled Cheque?
Posted on Monday, September 9th, 2024 | By IndusInd Bank
When you join a new employer’s payroll or apply for a loan, you must promptly provide your bank details.
A cancelled cheque can simplify this process. It is a common financial document used for verification with no validity for transactions.
Let’s explore what a cancelled cheque is, how to write one, and where it is usually required.
Understanding Cancelled Cheques
- A cancelled cheque is a cheque that has been marked to indicate it is no longer valid for transactions.
- Two parallel lines are drawn across the cheque, with ‘CANCELLED’ written between them.
- The main aim of a cancelled cheque is to provide proof of your bank account details without the risk of it being used to withdraw money. One must not add a signature to a cancelled cheque.
- Some may think that a cancelled cheque might seem risky due to the exposure of your bank details. However, it is generally safe. The cheque cannot be used for transactions or withdrawals. The only information accessible is your account number, bank name, and branch details. These are necessary for verification.
How to Write a Cancelled Cheque
Here’s a step-by-step guide on how to cancel a cheque:
1. Take a Cheque Leaf
Use a fresh cheque from the chequebook associated with your bank account.
2. Draw Two Parallel Lines
Across the cheque, diagonally draw two parallel lines. Make sure the lines do not cover or hide the essential bank information. This can include the account number, account holder’s name, MICR code, branch name and address, etc.
3. Write ‘CANCELLED’
Write the word ‘CANCELLED’ between the parallel lines. Make sure not to sign the cheque or fill in any other details.
Now you know how to write a cancelled cheque. Remember to follow the precautions, such as not signing the cheque, to ensure it serves its purpose without misuse.
When Do You Need to Provide a Cancelled Cheque?
Knowing how to cancel a cheque can prove beneficial in various scenarios, such as when:
1. Setting Up Electronic Fund Transfers
You might need to provide a cancelled cheque when setting up electronic funds transfers to receive salaries or other payments. Employers or financial institutions use a cancelled cheque to verify bank account details.
2. Applying for Loans
Financial institutions often ask for a cancelled cheque when you apply for a loan. This helps ensure they have the correct bank account information.
3. Opening Investment Accounts
A cancelled cheque is often requested to verify your account details when opening a new DEMAT account.
4. Setting up Automatic Payments
A cancelled cheque may be required to validate your bank account when setting up EMI payments.
5. Carrying out KYC Verification
Cancelled cheques are sometimes required for Know Your Customer (KYC) processes. This helps ensure your banking details and identity.
Also Read: Understanding eKYC- What You Need to Know
Conclusion
A cancelled cheque is an essential document for various banking and financial processes. Know how to cancel a cheque to make things easier when you apply for a loan, open investment accounts, set up EMIs, and more. Remember to follow basic precautions to ensure a safe process.
Whether you want to provide a cancelled cheque or transfer funds, a good banking partner is important. This is why you must open a bank account with IndusInd Bank.
We offer convenient digital banking services, solid customer support, attractive interest rates, feature-rich debit cards, and more. The best part? You can open a new savings account digitally, within minutes!
Open a Savings Account online with IndusInd Bank now!
Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
