Cancelled Cheque – Detailed Information from General Perspective
Cancelled Cheque: We all know that Cheque is an important form of Money. It is one of the very essential modes of Transaction. Most Commercial Banks issue Cheque-Book to their customers on a voluntary basis or on request. A Cancelled Cheque is a KYC to prove that you have a bank account. Most of the banking process has become online now. NEFT, RTGS used for the large transaction of money, whereas UPI use for small and medium transactions. Most of these processes are done from various Apps, Mobile Banking, or Official Application by the particular bank. But the use of Cancelled Cheque is still there for various purposes.
What is Cancelled Cheque?
A cancelled cheque is a special form of a normal cheque. Which is crossed and the word “CANCELLED” is handwritten or Stamped across. Other than this word nothing else would be written on the particular cheque. A canceled cheque is valid proof that you have an account with the bank. The canceled cheque is also used to give other important information such as account number, cheque number, IFSC, and MICR code to whosoever is related.
How to issue a cancelled cheque?
Issuing a ‘valid’ cancelled cheque is very easy, just you need to do is strike off the cheque by drawing two parallel lines and write “CANCELLED” between them. Please remember! Do not sign or mention a date on it!
Information that available on a cancelled cheque:
- Account Holder’s name
- Account number
- Name and address of the bank
Uses of a canceled cheque:
1. Electronic clearance service (ECS)
A canceled cheque is required for the Electronic Clearance Services (ECS), which is required for the deduction of money from your account every single month.
2. Equated Monthly Installments (EMI’s)
If you want to avail of various loans such as home loans, car loans, education loans, and consumer durable product loans, you need to provide a canceled cheque to clear the loan process. This is proof that you hold a genuine bank account.
Know Your Customer popularly known as KYC is required for almost all investments nowadays. KYC is required for most Financial matters like Investing in the Share Market-Stocks, Opening of Demat Account, Investing in Mutual Funds, Investing in Foreign Currency or Crypto like Bitcoin, etc. A cancelled cheque may be used for such a verification process.
Some other use of canceled cheque includes Employer’s Provident Fund (EPF), Insurance policy, etc.
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What is the use of a canceled cheque?
You can use it for various purposes like KYC, ECS, EMI, etc.
Can I issue a canceled cheque?
If you have a checkbook provided by your bank, you can issue canceled cheque.