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What is a Cancelled Cheque?
Uses of a Cancelled Cheque
How to prepare a Cancelled Cheque?
FAQs
A cancelled cheque is a cheque leaf on which two parallel lines are drawn and the word ‘Cancelled' written in between them.Nothing else should be written on a cancelled cheque and it need not have your signature on it. However, the cheque will consist of your bank account number, MICR code and cheque number which can be used for the reference of concerned persons. The purpose of a cancelled cheque is that it should not be misused by anyone and no one can withdraw money without your knowledge. Uses of a Cancelled Cheque Below is the list of areas where a cancelled cheque is required for verification.
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Opening Bank Accounts: If you want to open a savings or current bank account, you need to submit a cancelled cheque to complete the process.
Know Your Customer(KYC): A cancelled cheque has become essential for KYC procedures and documentation. Investment plans like mutual funds, stocks require KYC documents in which a cancelled cheque submission is mandatory.
Electronic Clearance Service (ECS): Deduction of money from your account using Electronic Clearance Service requires a cancelled cheque.
EMIs: A cancelled cheque is a requisite for finalizing EMI payments for various types of loans such as home, auto, education and business loans.
Insurance: Submission of a cancelled cheque is mandatory on the purchase of insurance policies like health, endowment, money back etc.
Demat Account: A cancelled cheque needs to be submitted to the stock brokerage while opening a Demat account which is essential for stock trading and investments.
EPF Withdrawal: To withdraw your Employee Provident Fund (EPF), you need to submit a cancelled cheque to the organization you worked with or for the Employee Provident Fund office.
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Take a cheque leaf out of your recent cheque book
Do not enter any of your personal information like name, signature, date or amount
Just draw two parallel lines across the cheque, preferably diagonally
Write the word ‘Cancelled’ in between the parallel lines
Your cancelled cheque is ready
These are the above areas where you need to issue a cancelled cheque to complete the process. Though a cancelled cheque cannot be misused, there have been instances in the past of cheque fraud. See that you cancel the cheque carefully and submit it in person to minimize the risks.
FAQs of Cancelled Cheque
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Can someone withdraw money from my account using a cancelled cheque?