How To Write A Cancelled Cheque ?
15 May, 2024
Synopsis
A cancelled cheque is essentially a cheque that is rendered void by the issuer.
It is important to know how to write cancelled cheque to secure your finances.
You may need to write a cancelled cheque for various reasons like payroll verification, ECS activation, etc.
Cheques have been used in the financial transaction for decades, offering a tangible form of payment in an increasingly digital world. However, circumstances may arise when you may need to provide a cancelled cheque or cancel an already written cheque, whether due to errors, loss, or other reasons. Understanding the process of cancelling a cheque is important to safeguard your financial interests and ensure smooth transactions. This article looks at the reasons why you might need to cancel a cheque, how to cancel a cheque and explains how to do so effectively.
What is a Cancelled Cheque?
A cancelled cheque is essentially a cheque that is rendered void by the issuer. This is typically done by marking the cheque with the word ‘CANCELLED’ across its face. The purpose of cancelling a cheque is to ensure that it is not misused or cashed by anyone else. While a cancelled cheque may lose its financial value, it still retains essential details such as the account holder’s name, account number, and MICR code.
How to Write a Cancelled Cheque?
Writing a cancelled cheque is a straightforward process, involving these below mentioned steps:
Choose a cheque leaf from your cheque book. Ideally you can take the first unused cheque in the chronological order in your cheque book.
Using a pen with indelible ink, draw two horizontal lines across the cheque.
Write the word ‘CANCELLED’, preferably in bold, clearly and legibly between the horizontal lines and across the face of the cheque. Ensure that the marking is prominent and covers the majority of the cheque’s surface.
While not mandatory, you can take extra precautionary measures to ensure the cancellation. This may include perforating the cheque with a ‘VOID’ stamp or writing ‘For Electronic Clearing Only’ beneath the cancellation marking.
The last step is to sign the cancelled cheque in the designated signature space. This further validates the cancellation process and confirms that the cancellation was authorised by the account holder.
Uses of a Cancelled Cheque
While a cancelled cheque may no longer be encashed, it serves various essential purposes within the Indian financial ecosystem. Here are some reasons why you may need to write such a cheque:
Bank Account Verification
One of the primary uses of a cancelled cheque is to verify the authenticity of a bank account. When opening a new account or engaging in financial transactions such as applying for loans or investments, banks often require a cancelled cheque as proof of account ownership.
Electronic Clearing Services (ECS)
Many financial transactions, such as payment of utility bills, loan EMIs (Equated Monthly Instalments), or mutual fund investments, are processed through ECS. A cancelled cheque is typically required as part of the ECS mandate form to authorise the transfer of funds from your bank account.
Income Tax Filing
When filing income tax returns, you often need to provide a cancelled cheque along with other documents for verification and refund purposes. The cancelled cheque serves as proof of bank account details, ensuring accurate and timely refunds.
Direct Debit Authorisation
Setting up automatic payments or direct debits for various services often requires providing a cancelled cheque to the service provider. This ensures that the correct bank account is linked for seamless transactions.
Salary Processing
Employers may request a cancelled cheque from employees for salary processing purposes. Such cheques help in accurately crediting salaries to the designated employees’ bank accounts and ensures smooth payroll operations.
Know Your Customer (KYC) Compliance
Financial institutions, as part of their KYC procedures, may request a cancelled cheque from you to verify your bank account details. This helps in preventing fraudulent activities and ensuring compliance with regulatory requirements.
Refund Processing
In scenarios where refunds are issued, such as security deposits or insurance claims, a cancelled cheque is often required by the issuing authority to facilitate the refund process. It ensures that the refund amount is credited to the correct bank account securely.
In essence, a cancelled cheque acts as a multifaceted instrument that not only verifies bank account details but also facilitates various financial transactions with enhanced security and authenticity. Its significance extends across diverse domains, ranging from banking to taxation and payrolls.
Get A Cheque Book Instantly On Opening Your HDFC Bank Account
At HDFC Bank, we endeavour to offer an unparalleled banking experience. When you open an account with us, we provide all the necessary paraphernalia to assist with smooth banking transactions, including a complementary debit card and a cheque book comprising 25 leaflets. Moreover, you can order chequebooks directly through your internet/mobile banking account or through HDFC Bank ATMs. Open your HDFC Bank Savings account today.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
