A cheque is one of the What is a cancelled cheque? Have you ever wondered this? And why do we even need a cancelled cheque in the first place? Let’s find out.
What is a Cancelled Cheque?
A cancelled cheque, as the name suggest, is a cheque that has diagonal sloping parallel lines drawn in the middle of it with ‘Cancelled’ written in between these lines.
Why is a Cancelled Cheque Given?
A cancelled cheque is issues/given by the account holder to provide their account details as well as bank and branch details to the person concerned. There are various cases where one needs to submit a cancelled cheque, e.g.:
- Cancelled cheque for PF withdrawal
- Cancelled cheque for NPS
- Cancelled cheque at the time of college admission/job
- Cancelled cheque for loan applications
- Cancelled cheque for insurance policy purchase
Note: This is not an exhaustive list.
How to Write a Cancelled Cheque?
To write a cancelled cheque, follow the directions given below:
- Tear out a cheque leaf from your cheque book
- Draw 2 diagonal parallel lines crossing the cheque in the middle
- Sign this cheque
- No need to add any other details to make a cancelled cheque
Cancelled Cheque Format
The format of a cancelled cheque is shown as below:
Other Types of Cheques
In addition to cancelled cheques, there are several other types of cheques used in India for different purposes. Some of the commonly used types of cheques in India are:
- Bearer Cheque: A bearer cheque is a type of cheque that can be encashed by anyone who presents it to the bank, even if the cheque is not in their name. Bearer cheques are not very common nowadays due to the risk of loss or theft.
- Account Payee Cheque: An account payee cheque is a type of cheque where the words “account payee” or “account payee only” are written between the two parallel lines that are usually drawn on the left-hand top corner of the cheque. This indicates that the cheque can only be deposited in the account of the payee mentioned on the cheque, and not encashed over the counter. This is done to ensure the safety of the payment and to prevent the possibility of the cheque being misused. Account payee cheques are commonly used for making payments to known parties and for high-value transactions.
- Blank Cheque: A blank cheque is a cheque that has been signed by the account holder, but does not have the amount or the payee details filled in. It is a very risky practice as it can be easily misused if it falls into the wrong hands. Blank cheques are typically used for emergency situations where the account holder wants to delegate the authority to someone else to fill in the amount and payee details. However, this practice is strongly discouraged and it’s always recommended to use other modes of payment instead.
- Banker’s Cheque: It is a type of cheque that is issued by a bank on behalf of a customer. It is a guaranteed form of payment as the bank itself is the payer and the customer’s account is debited for the amount of the cheque. The bank ensures that the funds are available in the customer’s account before issuing the banker’s cheque.
- Post-dated Cheque: A post-dated cheque is a type of cheque that has a future date mentioned on it. This type of cheque is commonly used for making payments in installments or for payments that are due at a future date.
- Self Cheque: A self cheque is a type of cheque that is written by the account holder and made payable to themselves. This type of cheque is commonly used for withdrawing cash from the bank or for transferring funds between accounts held by the same person.
- Crossed Cheque: A crossed cheque is a type of cheque that has two parallel lines drawn across it. This indicates that the cheque can only be deposited in a bank account and cannot be encashed over the counter. Crossed cheques are commonly used for making payments to known parties to ensure the safety of the payment.
It’s important to note that the usage and acceptability of these types of cheques may vary based on the specific bank or financial institution. It’s always recommended to check with the relevant bank or financial institution for the latest and accurate information regarding cheque usage.
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Cancelled Cheque: FAQs
Yes. You need to put in your signature when giving a cancelled cheque to anyone, for any purpose.
No. A cancelled cheque cannot be used for anything other than account and bank information.
Draw two parallel lines diagonally in the middle of an empty cheque to make a cancelled cheque.
No. A cancelled cheque bears no charges or fees whatsoever.
