A cancelled Cheque is a cheque with no transaction capability. This cheque bears an inscription “Cancelled” on their surface between two lines that are drawn diagonally. The main purpose of such a procedure is to cancel the transactional power of the cheque. According to many experts, a cheque is canceled to avoid its misuse and to make it inefficient for any transaction. Even though, the canceled cheques have no transactional powers it has numerous uses.
How do I Write a Cancelled Cheque?
To cancel a cheque, First, you need to do is draw 2 parallel lines on the cheque and write ‘Cancelled’ in between the 2 lines as you can see in the image below. A canceled cheque doesn’t require anyone’s signature. It gives details such as account number, account holder’s name, MICR code, name and branch address of the bank.
- Proof – A canceled cheque is a proof of your bank account and branch
- Bank details – For various services, the institutions will need accurate details of your bank account, branch, and IFSC codes. A cancelled cheque can provide all these information’s in one go.
Here are the details that can be extracted from a Federal Bank cancelled cheque
- Name of the bank
- Name of the cheque holder/account holder
- Account number
- IFSC code
- MICR code
Why is Cancelled Cheque Required?
Cancelled cheque is used as a proof that you hold an account in the given bank. These may be required at the time of taking a loan, investing in mutual funds, setting up Electronic Clearance Service, taking insurance policy and for other similar purposes.
Apart from the above-mentioned uses of the canceled cheque, it also serves many other purposes like
KYC (Know Your Customer) – canceled cheques are used for documentation purposes.
For opening bank account – if you want to open a savings account or current account with your bank you will have to submit a cancelled cheque for the completion of the application procedure.
EMI – for availing loans and other services that involve EMI’s require a cancelled cheque to complete the process of calculation of EMI’s.
ECS – To avail Electronic Clearance Service the applicant should submit a cancelled cheque for deduction of money from the account regularly.
For applying for insurance schemes, almost every insurance scheme in India asks the applicant to submit a cancelled cheque for successful completion of the application procedure.
EPF – To withdraw an amount from the Employee Provident Fund, the employee has to fill in the form and submit the form along with a cancelled cheque.
Stock market – A demant account is a key requirement for anyone who wants to trade or invest in stocks and for a demant account, the applicant should submit canceled cheque and other proofs.
Canceled cheques cannot be used for any transaction, but, it can be used as proof and necessary document for several purposes as mentioned above. All the details mentioned above were collected from various websites.
How do I get a Cancelled Check?
Copies of canceled checks are available for up to 7 years from the date they are posted to your account. To order check copies, sign in to Online Banking, and visit the Customer Service TAB. Select “Order Copy of a Check” and then choose the account and checks that you would like to order.
What happens if a Cheque is Cancelled?
If the canceled check made its way into your account, the money would be removed within days. … This would cause your bank to refuse payment on checks you have written, creating a snowball of negative effects on your finances