A cancelled cheque in India simply refers to any cheque that has strike marks on it with the words ‘cancelled’ written across. A cancelled cheque is considered to be proof that you actually hold an account with the bank.
Issuing a Cancelled Cheque
To cancel a cheque leaf, all you need to do is draw two parallel lines across the cheque and write ‘Cancelled’ in between the two lines. A cancelled cheque doesn’t require your signature. It gives details such as account number, account holder’s name, MICR code, name and branch address of the bank.
Use of Cancelled Cheques
- Most investment organisations give utmost importance to Know Your Customer (KYC) guidelines. So if you are investing in Mutual Funds or the stock market, the company will ask for a cancelled cheque to verify if the account associated with the investment actually belongs to you.
- From purchasing of accessories like a mobile phone, TV or fridge to applying for a Car Loan, Home Loan, Education Loan, etc., EMIs have become the favourite mode of payment. And to set the process of EMIs rolling, a cancelled cheque is required as proof that you hold a bank account.
- A cancelled cheque is needed to set up the Electronic Clearance Service, which automatically deducts money from your account every month.
- To withdraw your provident fund amount, companies generally ask for a cancelled cheque with your name on it to validate your account details.
- Even while purchasing an insurance policy, a cancelled cheque is required.
Well, we hope that we have answered all your doubts about a cancelled cheque. If you are looking for some investment options, go ahead and explore!
