Master the Art of Writing a Cancelled Cheque like a Pro

In order to verify a user's banking information, banks or financial institutions may request cancelled cheques as proof of a valid bank account. Primarily, it's imperative to understand the purpose of a cancelled cheque, how to correctly fill it out, and when it may be necessary for various financial purposes.

What Does a Cancelled Cheque Mean?

A cancelled cheque is a crossed cheque that contains two parallel lines with the word "CANCELLED" written between them. This prevents unauthorized use for financial transactions. Even though these cheques are voided, they still display sensitive information like account holder's name, bank account number, cheque number, MICR code, and IFSC code, which can be used for cybercrime. Thus, it's crucial to maintain security when handling and disposing of cancelled cheques.

How to Fill a Cancelled Cheque?

When submitting a cancelled cheque to a bank or non-banking financial company (NBFC), follow the given instructions below:

• • Use a fresh cheque, leaving it blank without any additional information specifying payee's name, amount, and signature, etc.
  • Draw two parallel lines across the cheque
  • Write "CANCELLED" in capital letters in between the two parallel lines.
  • Check that the parallel lines should not cross the crucial information such as account number, IFSC code, MICR code, account holder's name, bank's name, or address.
• For further information, check:How to Write a Cheque – a Step by Step Guide to Follow

• When is a Cancelled Cheque Required?

• A cancelled cheque is required for various purposes, which include:
• KYC: A cancelled cheque is the most crucial document needed while investing in the stock market, mutual funds, or other financial schemes. This document verifies the authenticity of the bank account and is required for KYC completion.
• EPF withdrawal: Providing a cancelled cheque is mandatory for withdrawing funds from your Employee Provident Fund (EPF) Account.
• Electronic clearance service (ECS): Providing a cancelled cheque enables you to transfer funds from one bank account to another through the ECS method. Submitting a cancelled cheque to your bank is necessary to activate ECS services permanently.
• EMIs: A cancelled cheque is mandatory for processing equated monthly installment (EMI) payments. Banks, NBFCs need proof of a bank account while finalizing EMIs on loan or credit.
• Demat Account: In order to open a Demat Account, a cancelled cheque is mandatory for submitting Know Your Customer (KYC) documents, including proof of identity, address, and bank account details for buying and selling securities.
• Insurance: A cancelled cheque serves as proof of bank account and is mandatory for insurance companies to process premium payments and other financial transactions related to the insurance policy.

How to Cancel a Check?

To cancel a check, draw two parallel lines across it and write the word "Cancelled" between the lines. This invalidates the check and ensures it cannot be cashed.

When Do You Need a Cancelled Check?

Cancelled checks are often required for various purposes, including completing KYC requirements, opening a Demat account, investing in an insurance policy, processing EMI payments, or withdrawing EPF amounts.

Can Your Bank Cancel a Check?

No, your bank cannot cancel a check on your behalf. You must cancel the check on your own. If you do not have a check available to cancel, your bank will provide you with one for the purpose.

Can You Sign a Cancelled Check?

You should not sign or write any information on a cancelled check, including your signature, the payee's name, or the amount.

What Risks Are Associated With Cancelled Checks?

While cancelled checks themselves are not dangerous, they do contain sensitive information such as the account holder's name, bank name, IFSC code, and MICR that can be misused. Always exercise caution when handling a cancelled check.

Can You Use Red Ink to Cancel a Check?

No, only black or blue ink should be used to cancel or write a check. Other ink colors are not accepted by banks or NBFCs.

Can You Block a Check Leaf Online?

Yes, you can block a check by contacting your bank or logging into your bank's official website. This ensures that the check cannot be used or cashed.