Cancelled Cheque Meaning
A Cancelled Cheque is a cheque that is crossed with two lines and has the word 'cancelled' written across the cheque. A cheque may get cancelled due to the mistakes made at the time of writing a cheque as well. Usually, the word cancelled will be written on the cheque so that it is not misused in any way by anybody.
Generally, a cancelled cheque acts a proof that the individual who owns the cheque do hold an account with a bank. Apart from this, even though the cancelled cheque cannot be used for withdrawing money from the bank it does contain all the information associated with the respective account like name of the account holder, account number of the drawer, IFSC Code, cheque number, bank branch name, MICR Code, in which the account exists.
There is no need to sign on the cancelled cheque or write anything on it. No one will be able to withdraw from a cancelled cheque or will be able to carry out any kind of fraudulent activities using a cancelled cheque.
Do ensure not to put your signature anywhere on the cancelled cheque and do hand it over to the concerned person who is in charge of collecting the same to be on a safer side.
When do we require a cancelled cheque?
We would have come across the term 'cancelled cheque' while transacting in a bank. Yet, the use of a cancelled cheque is not limited to only bank transactions. There are several reasons when we will be asked to present a cancelled cheque.
A cancelled cheque will be required to be submitted for the below-mentioned purposes:
- While setting an Electronic Clearance Service (ECS) from your savings account.
- An individual may have to submit a cancelled cheque for KYC purpose.
- A bank or a financial institution often asks loan borrowers to submit a cancelled cheque to process their loan request.
- One has to submit a cancelled cheque while opening a demat account.
- At the time of purchasing insurance policies like money back policy or endowment plan, the insurer will be asked to submit a cancelled cheque.
- At the time of, opening a bank account, a cancelled cheque has to be submitted for completing the account opening process.
How to Write a Cancelled Cheque?
Cancelling a cheque is an important aspect as cheques can be used easily for conducting fraudulent activities. If in case you are cancelling a cheque, then do follow the below-mentioned list of steps:
Step 1: First take a fresh cheque leaf from your cheque book you wish to cancel.
Step 2: Now draw two parallel cross lines across the cheque.
Step 3: Proceed further and write 'CANCELLED' between the two parallel lines in capital lines.
Please Note: Do not sign anywhere on the cheque. Ensure that you do not write parallel lines on any of the important details like cheque number, MICR Code, account number, name of the account holder, IFSC Code, branch address and so on.
If in case, you have committed an error while writing a cheque, then start from step 2 of the above-mentioned cheque cancellation procedure.