Cancelled cheques are required to meet compliance requirements and are used across a number of financial instruments, loans etc. Cancelled cheque is nothing but "Cancelled" written across the cheque and by marking a cross on the same.

By writing cancelled on the cheque there are less chances of it getting misused. Financial institutions require cancelled cheque for RTGS purpose where they will need all the details pertaining to cheque which are critical. The cheque can provide them account number, your name, MICR code, IFSC code etc., so as to enable refunds and direct credit to accounts through RTGS or NEFT.

Here are few areas where a cancelled cheque maybe required.

1) Know Your Customer(KYC): While filing KYC, you may be asked to submit along with it. It is used for mutual fund and stock investment compliance.
2) Electronic Clearance Service(ECS): ECS are usually required for mutual funds for deducting money from your account.
3) Equated Monthly Installment(EMI): Banks require it for processing for various types of loans like education loan, home loan, car loan etc.
4) Insurance policy: Once you opt for any insurance policy like term plan, endowment plan, health plan you need to submit a cancelled cheque.
5) Account opening: Cancelled cheque is required while opening demand account and you need to submit along with other documents.
6) EPF withdrawal: In case you want to withdraw amount from EPF, you need to submit to the EPFO it will help them to validate your account details.

One should be carefully with the cancelled cheque as well because it may help wrongdoer to fetch all details about you. However, he cannot withdraw money from your account with that cancelled cheque.

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