What Is A Cancelled Cheque & How Do You Write A Cancelled Cheque?

This article explains what a cancelled cheque is and how to write one. Discover why cancelled cheques are used and how to write one properly with this easy-to-follow guide!

16 Feb,2023 10:29 IST 2752
What Is A Cancelled Cheque & How Do You Write A Cancelled Cheque?

A cancelled cheque is one marked with two lines and the word "cancelled" written across it. The intent was essentially in case of mistakes made when writing the cheque, but it is unnecessary to write anything else besides "cancelled."

However, another purpose of cancelling a cheque is to prevent it from being misused. Despite this, a cancelled cheque indicates that the person has a bank account. Although you cannot use it to take money out of the account, it includes information such as the account holder's name, account number, MICR code, IFSC code, bank name and branch location, and cheque number.

This article explains what a cancelled cheque is and how to write a cancelled cheque in detail.

What Is The Purpose Of A Cancelled Cheque?

You cannot use a cancelled cheque to withdraw funds, but it has other uses, including the following.

• Know Your Customer (KYC) procedures for investing in mutual funds or stocks, as it provides proof of a bank account and account holder information.
• Equated Monthly Installments (EMI) for loans such as car loans, education loans, and home loans. The bank or lending company requires a cancelled cheque for the monthly payment.
• Opening a Demat account to hold shares electronically. A cancelled cheque and other KYC documents, such as proof of identity and address, are required.
• Electronic Clearance Service (ECS) for electronic funds transfers between bank accounts. A cancelled cheque is needed to set up the monthly deduction.
• Withdrawing Employee Provident Fund (EPF) money. A cancelled cheque is required to verify account details.
• Insurance policies, as some organisations, may require a cancelled cheque from the policy buyer.

How To Write A Cancelled Cheque?

It is essential to cancel a cheque to ensure correct usage. To cancel a cheque for a specific purpose, follow these steps:

Step 1:

Obtain a new cheque from your cheque-book and do not sign it.

Step 2:

Draw two parallel lines across the cheque.

Step 3:

Write "CANCELLED" in capital letters between the two lines.

Please note the parallel lines should not cover important information such as the account number, account holder name, IFSC code, MICR code, bank name and branch address, etc.

If you cancel a cheque due to an error, begin with step 2.

When providing a cancelled cheque to someone, ensure that it is not signed and handed over to the appropriate person in charge to ensure safety.

Apply For A Loan With IIFL Finance

Applying for a loan with IIFL Finance is simple. The first step is determining your loan eligibility and the amount you need. You can do this by using the loan eligibility calculator on the IIFL Finance website. Once you have this information, you can complete the loan application form online.

You will need to provide your personal information. You may also be required to submit supporting documents such as proof of identity and address. Once the application is complete and after submitting all the necessary documents, IIFL Finance will process the application and get back to you with an approval or rejection within a few working days. If approved, you will receive the loan amount in your account.

Frequently Asked Questions

Q.1: How to write a cancelled cheque?
Ans: A cancelled cheque is written by drawing two parallel lines on a sheet of cheque and the word "cancelled" written across it.

Q.2: Why is a cancelled cheque used?
Ans: Previously, in case of mistakes made when writing the cheque, it was cancelled. But, it is unnecessary to write anything else besides "cancelled." The purpose of cancelling a cheque is to prevent it from being misused.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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