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A cancelled cheque has the words cancelled written across it. Unlike regular cheques, the issuer doesn’t have to sign on it. It’s used as a form of KYC in many banks. It is a very common banking instrument.

Although all banks today offer a host of online services via internet banking and mobile banking, there are still several customers who do not prefer digital banking. There can be a variety of reasons for such aversion like mistrust on online banking, digital illiteracy, etc. In such cases, a cancelled cheque is an easy and effective way to authenticate that the person is a valid account holder of the bank.

How to issue a cancelled cheque?

It is very simple to cancel a cheque. The cheque holder just has to simply draw two lines across the cheque to cancel it. The issuer of a cancelled cheque also has to write the words cancelled across the cheque leaf. This cheque cannot be used to withdraw any amount against the cheque or to endorse it to anyone else.

What is the need for issuing a cancelled cheque?

A cancelled cheque can be used for a variety of reasons. Some of the benefits or used of the cancelled cheques are mentioned below.

Bank account opening

While opening a savings or current account with a bank, one often has to submit a cancelled cheque to complete the account opening process.


Every bank has its own KYC process. Knowing your customer (KYC) is highly essential for all investment products like mutual funds, stock investments, insurance, etc.


Electronic clearing service (ECS) is a system that is used for deducting money from one’s account every month. This system also requires a cancelled cheque.


Every loan product has an easy repayment option in the form of EMIs (Easy Monthly Installments). There are a variety of loan products available today to cater to every need of the borrower whether it is a loan for purchase of house or car or property or even electronics or household items. Cancelled cheques form a crucial part in the completion of the loan sanctioning process.

EPF withdrawal

Another important area where a cancelled cheque would be needed is in case of withdrawal of EPF. The person needs to submit the cancelled cheque to the EPF or the organization that he/she is currently employed in. This will help in validating the employee’s account details.

Insurance policy

Issuing an insurance policy also requires a cancelled cheque whether the product is an insurance policy like term, endowment, money back, health, etc. The cancelled cheque has to be submitted to the organization or agent.

Demat account

A demat account is mandatory for any person who wants to trade or invest in stocks. An important process in opening such demat account is submitting a cancelled cheque to the stock broker along with the account opening form, ID proof, address proof, etc.

Information that can be obtained from a Cancelled Cheque

Although the cancelled cheque does not have any monetary value, there can be much information that can be derived out of it.

Following are the details that can be obtained from a cancelled cheque.

  • Account holder’s Name
  • Account number
  • IFSC Code
  • MICR Code
  • Name of the bank and its branch

Misuse of Cancelled Cheque

Cancelled cheques are used basically as a KYC requirement by banks and other financial institutions. However, there have been cases of misuse of a cancelled cheque. It is therefore imperative that the issuer of the cancelled cheque should never sign it.

Also, wherever possible, the issuer should also enquire if he/she can submit a scanned copy or a photocopy of the front page of the passbook or the cheque as the basic requirement of a cancelled cheque is to authenticate the validity of the account held and for verification of the account holder.

FAQs on Cancelled Cheque

1. How can a person issue a cancelled cheque?

For issuing a cancelled cheque, the account holder has to simply draw two parallel lines across the face of the cheque and write the words cancelled between them.

2. Does the issuer need to sign the cancelled cheque?

No. A cancelled cheque should not be signed.

3. Can a person withdraw any amount or endorse a cancelled cheque?

No. No amount can be drawn against a cancelled cheque and it can also not be endorsed.

4. Can a cheque be considered to be a cancelled cheque by only drawing two parallel lines across it?

No. The word ‘cancelled’ has to be written between the two drawn lines across the cheque for it to be truly considered as a cancelled cheque. This will ensure that the bank will accept such cheque to be cancelled cheque and will also ensure that it is not misused.

5. What is the information that can be received from a cancelled cheque?

The information that can be received from a cancelled cheque is given below.

  • Account holder’s Name
  • Account number
  • IFSC Code
  • MICR Code
  • Name of the bank and its branch

What Is A Cancelled Cheque - Customer Reviews

0 / 5 (1 Reviews)
21 Feb 2021

Good website - easy to use,

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