A cancelled cheque serves as proof that you have an account with a particular bank. It is important to know about this document as it comes in handy in numerous situations. In fact, you also have to submit it when you are shopping for items on EMI. You need to do this to assure the financer that you have a valid bank account.
For a deeper understanding on why a cancelled cheque is necessary, how you can write one and when it comes handy, read on.
What is a cancelled cheque?
A cheque features your bank account number, cheque number, IFSC code and the MICR code. In short, every leaf of your cheque book has your account details, and thus, by issuing a cheque you can authorise someone to transact with your account. However, issuing a blank cheque can be hazardous, as someone can easily enter an amount to retrieve money from your account. In order to prevent the misuse, you are required to cancel the cheque.
While issuing a cancelled cheque, always remember to write the word ‘cancelled’ on it. Once you do this and cancel the cheque, you or anyone else cannot use it for any transactions. However, the details mentioned on the cheque remains valid and can be used to process various finance-related applications.
How to write a cancelled cheque?
Now that you know what a cancelled cheque is, here’s how you can make a cancelled cheque that can be used as a document to help you process your applications. To write a cancelled cheque, you just need to follow the below-mentioned two simple steps.
- Pick a fresh cheque to cancel it. Ensure that you do not put a signature on it
- Draw two parallel lines across the cheque
- Write the word ‘cancelled’ in between the lines in block letters
- Ensure the parallel lines do not cover details, such as account number, account holder's name, MICR code, name and branch address of the bank, on the cheque
Various uses of a cancelled cheque
The process of making a cancelled cheque is, now as you know, very simple. There are numerous reasons for which you will need to issue a cancelled cheque. So, let’s take a look at some of the common applications that requires you to submit this document.
When you buy high-value products on EMI, you need to submit a cancelled cheque to your financier to verify your bank details. For instance, Bajaj Finserv requires you to submit a cancelled cheque when you’re applying for the Bajaj Finserv EMI Network Card to shop from the Bajaj Finserv EMI Network. Once you get the card, you can avail a pre-approved loan of up to Rs. 4 lakh to purchase electronics, home appliances, groceries, apparel, accessories or furniture. You can shop from any of the 60,000+ partner sellers online or offline, convert your purchase into No Cost EMIs and repay the amount over a flexible tenor ranging from 3 to 24 months.
You are required to submit a cancelled cheque when applying for a loan. To register for Electronic Clearance Service (ECS) for any loan or credit purchases, you need to submit a cancelled cheque, so that the financier can directly deduct the amount from your account every month on a specified date.
You may also have to submit a cancelled cheque when investing in mutual funds, provident funds or an insurance policy. Once again, you need to do this only when you want to link your bank account with your investment and want payments to be deducted from your bank account automatically.
Now that you know how to issue a cancelled cheque and where it is used, you can enjoy a smoother banking experience, and get the benefits of shopping on No Cost EMIs just as easily from the Bajaj Finserv EMI Network!
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