Cancelled Cheques

• Team Antworks

A canceled cheque is an original cancelled cheque leaf which bears an inscription ‘cancelled’ on it between two parallel lines drawn diagonally and therefore, has no transaction power. It is important to note that nothing else has to be written on a canceled cheque.

Uses of Cancelled Cheques:

Cancelled Cheques can be used for various purposes including compliance requirements such as listed below:

1. KYC: Cancelled cheques are used extensively in Know your customer (KYC) procedures and documentation. KYC is required for various types of investments such as stocks and mutual funds among others
2. Opening bank accounts: A prospective account holder (savings and current) has to submit a canceled cheque to successfully open his or her account with a bank
3. ECS: Electronic clearance service (ECS) requires submission of cancelled cheques to enable deduction of money from the accounts of customers regularly
4. EMIs: All banks ask their customers to submit Cancelled Cheques to finish the process of calculating and finalizing Equated Monthly Instalments (EMIs) for approving various types of loans such as home loans, education loans and car loans among others
5. Demat account: To complete the process of opening a demat account, a canceled cheque should be submitted to the concerned stockbroker. The cancelled cheque has to be produced with various other documents such as ID proof and account opening form among others
6. Insurance: Cancelled Cheques have to be submitted while buying various insurance policies such as endowment, health or term policies