If your cheque happens to fall into the wrong hands, it can get tricky. You may require to become proactive in getting your cheque cancelled and ensuring that your funds are not removed. Hence, this is why it is essential to know how to get a cancelled cheque written accurately.
when you draw two lines across a cheque leaf, it is regarded as a cancelled cheque. Moreover, within these two lines, you need to write the word, 'cancelled'. How to make cancelled cheque is a simple process and does not require any further details mentioned or written on it. A cancelled cheque does not report any monetary value. This means you cannot use the cancelled leaf to transfer funds or withdraw money. The idea behind cancelling a cheque is to make sure that any individual does not misuse it.
In most KYC documentation, a cancelled cheque is mandatory, as its primary use is to verify a bank account. There are numerous crucial details on a cheque leaf, such as the cheque number, the bank's IFSC code, the individual's account number, bank address and the MICR code. If a cheque is not crossed or cancelled, it can fall into the wrong hands and be misused.
There are several different uses for cancelled cheques. Some important ones include:
KYC documentation - Generally, KYC procedures and documentations require cancelled cheques. If you are looking to invest in market-linked instruments with a reputed stockbroker such as Kotak Securities, you would be asked to submit a cancelled cheque. To invest in mutual funds and trade in stocks, stockbrokers and mutual fund houses require a cancelled cheque as a part of KYC procedures.
Withdrawing money from EPF accounts - Salaried individuals who wish to withdraw money from their EPF accounts must submit a cancelled cheque. If you are looking to remove money from your EPF account, attach a cancelled cheque to the withdrawal form and submit it at the Employees Provident fund organization or your employer. This cancelled cheque confirms the details of your bank account to which the EPF amount must be credited.
Electronic Clearing Services (ECS) - As an automated mode of funds transfer, ECS is instrumental in facilitating credit or debit transactions without the need for paper, from one bank to another. If you wish to use the ECS option to deduct money from your bank account every month, you are required to present a cancelled cheque.
Demat account - As a new investor, you must submit a cancelled cheque to open a demat account . This cheque must be presented along with the account opening form and requisite KYC documentation.
Insurance - When you purchase an insurance plan, such as health or health or a medical policy, you may be asked to submit a cancelled cheque to the insurer.
To make cancelled cheque, you must simply draw two parallel lines across the cheque leaf. Write the word, 'cancelled' in between the parallel lines to certify the need as cancelled. A cancelled cheque does not require a signature. However, the details printed on the cheque leaf, such as the account number, your name, the bank's IFSC code, MICR code, name and address of the bank must be visible. The idea behind a cancelled cheque is that it is proof you have a bank account in the specific bank.
Knowing how to write a cancelled cheque can avoid unauthorized withdrawal of funds from your account. Ensure that you use blue or black ink to write on the cancelled the cheque. Typically, banks do not accept cancelled cheques in any other ink colour. Knowing how to cancel a cheque in the right way details can ensure you submit your cancelled cheque accurately and adhere to KYC procedures.
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