In today’s world of the internet and booming online marketing, everything is accessible with just the click of a button. As with all industries, banking also provides various online services, making many lives more straightforward regarding routine transactions. It includes fixed deposits, savings accounts, and loans. Although online banking is expanding exponentially, certain bank areas must be addressed traditionally.
The issue of canceled cheques is a standard procedure that must be manually completed. Although most people are conscious of the possibility of paying with cheques, many people who use online banking need clarification about canceled cheques. Learn details about the canceled cheque.
What is a Cancelled Cheque?
A canceled check refers to any cheque with mark marks with the words “cancelled” inscribed across it. A canceled cheque is believed to prove that the person has accounts with the institution. A canceled check is often required when a person withdraws EPF cash to establish the Electronic Clearance Service from the account.
How to Cancel a Cheque?
To cancel a check, you must make two lines along the check and write “Cancelled” across it. It is optional to sign the cheque that has been canceled. It serves as evidence of the existence of an account at the bank. The account holder’s name, along with the name of the branch and its address, account number, and MICR code on your check, is sufficient to present the cheque as evidence.
Why is a Cancelled Cheque Needed?
There are many instances when you will need to show your bank account details or bank account information instead of providing them in writing, which does not constitute an authentic document; a bank statement or a canceled cheque can be used to accomplish the same purpose. Here are a few instances that may require you to show an unpaid cheque
- Application for Loan If you are applying for a loan in the financial or banking sector, You will be required to provide a cheque that has been canceled. It could be a car credit, mortgage personal loan, education loan, etc.
- Making EMI payments at a retail store, you decide to purchase any product that comes with the possibility of EMI in it, and you decide to choose EMI, then you will need to provide a cheque that has been canceled from your bank. The financial institution will request the canceled cheque, which will then get your purchase financed.
- When investingIf you are planning to begin investing or are already an investor and want to have your KYC completed, The investment platform you select to invest with will request you to provide a cheque that has been canceled to prove your account. This helps verify the details of your account.
- If you want to withdraw your PF funds offline, you will be required to present and present a cheque that has been canceled that is tagged with the other necessary documents. This is required in order to confirm the information on your account.
- Electronic clearing serviceIf you would like to sign up for an electronic clearing service, where the desired amount is automatically taken from the bank balance, The canceled check will be required to confirm the account information.
- The purchase of an insurance policyWhile buying an insurance plan, the business will require the payment of a cheque in order to verify the details of the account.
- Alternative for NPS Option NPS If you have opted to sign up for an NPS account at tier II, you will need to present a cheque that has been canceled.
- Opening the Demat account to hold securities electronically, shareholders need a Demat account. A cheque that has been canceled is required for opening the Demat account, along with the other KYC documents.
Issuance of Cancelled Cheque
If you wish to present an unpaid cheque, you only need to be able to draw parallel lines over the check. Then add ‘Cancelled’ between the lines. A canceled cheque does not require your signature. It provides information such as the account number, account holder’s name, MICR codes, branch name, and institution’s address.
Although no one can withdraw funds from your account with the canceled cheque, fraudulent transactions using a canceled cheque have been reported before. It is sensible to be extremely cautious when you present an unpaid cheque. You should ensure that the person you hand the cheque to is reliable.
If you can issue a canceled check, write ” canceled” on the back of the cheque. If you do this and cancel the check, it is no longer valid for use by anyone else. It is to make any transactions. However, the information on the cheque remains valid and may be used for processing numerous financial-related applications.