The internet has altered the course of history. The way the banking area operates has been updated. Online banking eliminates the need for customers to visit bank branches for services such as money transfers, cash withdrawals, and others.
It has significantly reduced the number of cheque books, deposit slips, and other writing applications previously required by banking services. Yet, you must understand what a cancel cheque is and when a cancel cheque is useful.
What is a Cancel Cheque?
A cancel cheque is one that has been cancelled by drawing two parallel lines on the cheque and writing cancelled between them, and the cheque belongs to a specific bank. A cancelled check cannot be cashed, but it can be used for other purposes.
Why do We Need a Cancel Cheque?
A cancel cheque is required because it establishes that we have a bank account. To validate the bank account holder’s bank details, the bank or other financial organization requires a check. We also cancel a check if we make an error when filling it out. Cancelling a check ensures that it will not be misused. A cancelled check is needed in a variety of situations.
- KYC stands for “Know Your Client.” For many investments these days, knowing your customer is critical. KYC is essential for stock market investments such as cancelled cheques for Zerodha brokerage, mutual funds, insurance policies, and banking, among others. A cancel check is an vital KYC document.
- EMI (Equated Monthly Installment) To purchase anything on EMI, such as a smartphone, computer, or any other product, a cancel check is required to authenticate the EMI payment option. To proceed with the EMI payment method, the organization requested a cancelled check. There are several types of loans that demand a cancelled check for EMI payment, including vehicle loans, student loans, and home loans.
- ECS stands for Electronic Clearance Services. Every month, an electronic clearance service is utilized to deduct money from your accounts, and it requires a cancelled check. Mutual funds frequently use ECS.
- Removal of EPF Employee provident fund stands for employee provident fund. A paperwork and a cancelled check are required for withdrawals from the employee provident fund (EPF). The company or EPFO must be notified of these requirements. A cancelled check will assist them in verifying your account information.
- Policy of Insurance When you buy an insurance policy, such as health, money back, length, funding, and so on, you must give the company or agent a cancelled check.
- A Demat account is essential for anyone interested in investing or trading in stocks. A cancelled check, along with the account opening form, address proof, and ID evidence, must be provided to the stock brokerage.
Also Read: How to Write a Check?
How do I Cancel a Cheque?
- To begin, grab a fresh new cheque from your checkbook.
- Draw two large parallel lines on the front side of the check with a pen.
- There should be a gap between the two lines and the two lines should cover the central half of the cheque.
- Then, between the two parallel lines that have been drawn, write cancelled.
- Ensure sure your account number, IFSC code, or name of the cheque bearer and bank are displayed on the check.
- On the cancelled check, make no other notes, such as a signature or a date.
Is it Safe to Give a Canceled Cheque?
It is safe to give a cancelled cheque because no one can withdraw money with a cancelled cheque. It is proof of a person’s bank account and proof that no one can misuse that cheque. There are some chances of fraud if the cheque is handed over to a wrong person. Before giving a canceled cheque to any person make sure the person or the company is trustworthy and will not do any fraud with your bank details and cheque.
Does a Cancelled Cheque Need a Signature?
No, a cancelled cheque just requires two parallel lines with the word cancelled printed in between. Even if someone tells you to, you are not required to sign a cancelled check. There’s also the risk of fraud if you sign your name incorrectly or write any amount on the check.
Also Read: Duplicate Checks: What Are They?
What is the Alternative for Cancelled cheque?
If you don’t feel comfortable giving a cancelled cheque or don’t have one, there are three more options.
- If you don’t want to send a cancelled check, you can send a photocopy of your passbook instead. However, simply send the first page of the passbook, which includes the bank’s name, account holder’s name, and other information.
- Despite the canceled check, a photocopy of your bank statement can be submitted.
- If you do not wish to send your original cheque, you can instead submit a photocopy of the cancelled cheque, which you can use as many times as you need.
What is a Personalized Cancelled Cheque?
In a personalized canceled check, all information about the account holder is included, including his or her name. The name of the account holder, address, bank name, check number, account number, and IFSC code are all printed on it.
A cancelled check is essential in some situations. Even if a cancelled check ensures that no one can take funds from your account, there is a danger that your information could be misused. To cancel a check, follow the only instructions provided. To limit the chances of fraud, make sure you present the check to the correct individual before handing it over.