With the boom of internet and online marketing, anything and everything under the sun is just a few clicks away. Just like every other business sector, even banking has gone all out in providing various services online, making lives easier for millions of customers. This includes Fixed Deposits, Savings Account and Loans. But even as online banking is growing exponentially, there are certain aspects of banking that need to be taken care of in a traditional way.
Issuing cancelled cheques is one such process that needs to be done manually. While everyone is aware of payment through cheques, young online banking customers tend to have doubts about cancelled cheques. So, let’s go ahead and clear your doubts!
What is a Cancelled Cheque?
A cancelled cheque in India simply refers to any cheque that has strike marks on it with the words ‘cancelled’ written across. A cancelled cheque is considered to be proof that you actually hold an account with the bank. From withdrawal of EPF funds to setting up an Electronic Clearance Service from the account, a cancelled cheque is required in many cases.
But before we talk about the use of cancelled cheques, let us tell you how to issue a cancelled cheque.
Issuing a Cancelled Cheque
To cancel a cheque leaf, all you need to do is draw two parallel lines across the cheque and write ‘Cancelled’ in between the two lines. A cancelled cheque doesn’t require your signature. It gives details such as account number, account holder’s name, MICR code, name and branch address of the bank.
Though no one can withdraw money from your account using a cancelled cheque, fraudulent activities using a cancelled cheque have happened in the past. So be very careful when you issue a cancelled cheque and make sure that the person you are handing it over to is extremely trustworthy. Got it?
Use of Cancelled Cheques
- Most investment organisations give utmost importance to Know Your Customer (KYC) guidelines. So if you are investing in Mutual Funds or the stock market, the company will ask for a cancelled cheque to verify if the account associated with the investment actually belongs to you.
- From purchasing of accessories like a mobile phone, TV or fridge to applying for a Car Loan, Home Loan, Education Loan, etc., EMIs have become the favourite mode of payment. And to set the process of EMIs rolling, a cancelled cheque is required as proof that you hold a bank account.
- A cancelled cheque is needed to set up the Electronic Clearance Service, which automatically deducts money from your account every month.
- To withdraw your provident fund amount, companies generally ask for a cancelled cheque with your name on it to validate your account details.
- Even while purchasing an insurance policy, a cancelled cheque is required.
Well, we hope that we have answered all your doubts about a cancelled cheque. If you are looking for some investment options, go ahead and explore!