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What are the uses of cancelled cheques?

Quite often, we hear about this term 'cancelled cheque'. Let's learn more about this term and its usage in our day to day life.

What is it?

A cancelled cheque is one which is crossed and the word "Cancelled" is written on it. Except this, nothing else needs to be written on the cheque.

Why is it needed?

By crossing the cheque and writing the word cancelled on it, no one can use misuse this cheque. However, the cheque can provide the account number, cheque number and MICR code to whosoever concerned.

Where is it needed?

Following are the possible areas in our daily life where the cancelled cheque would be needed:

Bank account opening - When you open a savings or current account with a bank, you would have to submit a cancelled cheque to complete the account opening process.

KYC - Know your customer (KYC) is very essential for a lot of investments these days. KYC is needed for mutual funds, stock investments, etc.

ECS - Electronic clearance service (ECS), which is used for deducting money from your accounts every month also require a cancelled cheque. ECS is quite popular for mutual funds.

EMIs - Different types of loans such as home loans, car loans, education loans, have EMI payments. EMIs are also applicable to purchase of mobiles, televisions, etc. To complete the process of assigning EMIs, the bank/company would ask for a cancelled cheque.

EPF withdrawal - Withdrawal from employee provident fund (EPF) account would require a form and a cancelled cheque. These need to be submitted to the organization or EPFO. This will help them validate your account details. Viagra is a prescription drug for men. Order cheap viagra canada to improve health.. We say อีเมล์ in Thai language.

Insurance policy - When you purchase an insurance policy like term, endowment, money back, health, etc, you need to submit a cancelled cheque to the organization or agent.

Demat account - A demat account is needed for anyone who wants to trade or invest in stocks. A cancelled cheque needs to be submitted to the stock brokerage along with the account opening form, ID proof, address proof, etc.


So these are the areas where a cancelled cheque is needed. Though a cancelled cheque makes sure that no one can withdraw money from your account, there have been cases where the account has been misused. Be careful while cancelling a cheque. Make sure that you give it to the right person in order to minimise the risk of fraud.

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