A cancelled cheque is one of the most commonly requested financial documents in India. Whether you are applying for a loan, starting a SIP, buying an insurance policy, withdrawing EPF, or completing KYC, banks and financial institutions often ask for a cancelled cheque to verify your bank account details.
Although extremely simple to prepare, a cancelled cheque carries important information like your account number, branch, IFSC, and MICR code. Understanding how to write a cancelled cheque correctly and when it is required helps avoid mistakes and ensures smooth processing of financial services.
This detailed guide explains the meaning of a cancelled cheque, how to write one step-by-step, its uses, risks, and precautions.
⭐ What Is a Cancelled Cheque?
A cancelled cheque is a regular cheque from your chequebook on which the word “CANCELLED” is written across the front, usually between two parallel lines.
Once cancelled, the cheque cannot be used for payment, withdrawal, or any type of fund transfer.
Despite being unusable for transactions, the cheque still provides essential details such as:
- Account holder’s name
- Bank name
- Branch
- Account number
- IFSC code
- MICR code
- Cheque number
Because it displays all necessary financial identifiers, institutions use cancelled cheques for verification, not for payment.
⭐ How to Write (Cancel) a Cheque Correctly?
Writing a cancelled cheque is extremely simple, but many people make mistakes. Follow these steps to cancel a cheque properly:
1. Take a Fresh Cheque Leaf
Use any blank cheque from your chequebook. Do not fill in the name, amount, date, or signature.
2. Draw Two Parallel Lines
Using a pen, draw two diagonal or horizontal parallel lines across the cheque.
3. Write “CANCELLED” Clearly
Write the word CANCELLED in bold, capital letters between the lines.
Make sure it does not hide important details like account number or IFSC code.
4. Do NOT Sign the Cheque
Cancelled cheques should not be signed unless specifically requested (which is rare).
A signature increases the risk of misuse.
That’s it — your cancelled cheque is ready for documentation purposes.
⭐ Why Is a Cancelled Cheque Required?
Cancelled cheques are used widely across banking, investments, insurance, and employment processes. Here are the most common reasons institutions ask for one:
✔ Loan Applications
Banks require a cancelled cheque to confirm your bank details before disbursing loan amounts.
✔ Insurance Policies
Insurance companies request cancelled cheques for:
- Premium auto-debit
- Claim settlement
- Verification of bank account details
✔ SIP & Mutual Fund Investments
Before activating a SIP or processing withdrawals, mutual fund companies need to verify your bank account.
✔ EPF Withdrawal
A cancelled cheque is mandatory to ensure that EPF withdrawal is sent to the correct bank account.
✔ KYC Verification
Banks may require cancelled cheques when opening:
- Savings accounts
- Demat accounts
- Trading accounts
- Credit card accounts
✔ Salary Account Setup
Employers use cancelled cheques to confirm the employee’s salary account details.
✔ Income Tax Refunds
Used to verify bank account information during income tax documentation and refunds.
⭐ Other Uses of a Cancelled Cheque
Cancelled cheques are also useful for:
✔ Tracking payments
✔ Maintaining financial records
✔ Providing proof of bank details
✔ Resolving payment disputes
✔ Verifying high-value transactions
They act as a simple assurance that the individual owns the bank account.
⭐ Risks Associated With Cancelled Cheques
While cancelled cheques are mostly safe, they contain sensitive information. If misused, they can lead to banking or identity fraud.
❌ Fraudulent Use
Someone may attempt unauthorized actions with your account details.
❌ Identity Theft
Your name, bank account number, and branch can be misused for fraudulent applications.
❌ Unauthorized ECS Setup
Rarely, someone could attempt to create unauthorized automatic debit instructions.
❌ Misplacement or Loss
Losing a cancelled cheque exposes your banking information to strangers.
❌ Photocopy Misuse
A cancelled cheque is a physical document that can be duplicated easily.
⭐ Precautions to Take When Giving a Cancelled Cheque
To ensure safety, follow these guidelines:
✔ Do not sign the cancelled cheque
✔ Write “CANCELLED” clearly and boldly
✔ Never give extra blank cheques
✔ Share only when absolutely necessary
✔ Always hand it to trusted institutions
✔ Avoid giving photocopies unless officially requested
Being careful prevents fraud and unauthorized transactions.
⭐ Conclusion
Cancelled cheques are simple yet important documents used for confirming bank account details in a wide range of financial processes, including loans, SIPs, insurance, salary setup, EPF withdrawal, and KYC. Writing a cancelled cheque is extremely easy, but it must be done correctly and handled responsibly to avoid misuse.
Use cancelled cheques only when necessary and always ensure they are shared securely.
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