The Complete Process On How To Cancel A Cheque

You might have thought about what a cancelled cheque is or how to cancel a cheque.

A cancelled cheque is the one that has been crossed across, filling the entire space in the middle, and the term “cancelled” is written on it. Apart from this, it would help if you wrote nothing on the cheque. However, few experts recommend writing a previous date earlier than three months. Suppose the cheque is cancelled on the 15th of September, 2022, then write the date as 15/04/2022. Or, to avoid the complex calculation of three months, write 15/09/2021 instead of 15/09/2022. Thus, it makes the cheque invalid for payment.

The detailed procedure by referring to the cancel cheque image

The process of cheque cancellation is relatively more straightforward and doesn’t require your signature. A signature on a cheque could be the primary concern of the cheque issuer while submitting it to the bank. These cheques act as proof of one’s financial identity when borrowing loans, investing in the market, buying mutual funds, and so on. A signature on a cheque might bring trouble to the account holder. Therefore, do not sign a cancelled cheque if you want to avoid any problems.

The cancel cheque image shows only two lines across the cheque with the word ‘cancelled’ between them. You can ask your friends to provide a sample of a cancelled cheque for your reference. Another way to look at a cancel cheque image is to ask the person seeking your cancelled cheque. Be it an insurance agent or finance company.

This article further talks about what a cheque is, the types, and how to cancel a cheque. Keep scrolling to learn more.

What is a cheque?

A cheque is a negotiable instrument that comes under the Negotiable Instruments Act of 1881. It is a bill of exchange that is used for transferring the amount from the account of the person writing the cheque (the drawer) to the other person (the payee) through the bank.

The credibility of a cheque 

The vital thing to be reminded of is that a cheque is credible or valid only for three months from the date the drawer issued the cheque.

Characteristics of a cheque

Some characteristics of a cheque must be kept in mind while issuing a cheque.  

• Payable only on demand.
• Always made in cash or through an account transfer.
• Only drawn on a particular bank.

Types of cheque 

The six types of cheques are:

1. Bearer Cheque: This is a type of cheque encashed by the person carrying it. The bearer. Just the name of the bearer is verified, and the concerned bank makes the payment.
2. Blank cheque: A blank cheque is a cheque that includes only the sign of the issuer. No date, money, or even the name to whom it is paid is written. This type of blank cheque involves a high risk if someone finds and misuses it.
3. Order Cheque: These kinds of cheques are only cashed by the payee.
4. Open Cheque: It is an uncrossed cheque that one can encash at any bank so that banks can make the payment to the person who bears the cheque. These can also be transferred from the original payee to a different payee.
5. Crossed Cheque: These kinds of cheques are also known as the account payee cheque. In these cheques, the word “account payee” or “A/c payee” is written on the top left corner of the cheque, enclosed between two parallel lines. Payment for an account payee cheque is made only into the bank account of the person to whom the cheque is issued. The bank details should be mentioned afterwards. Thus, they prove to be the safest cheques to be issued. There is a clear track of who is receiving the payment and who is paying.
6. Cancelled Cheque: A cancelled cheque has two crossed lines passing from the middle of the cheque and the word “cancelled” written. You may cancel a cheque if any mistake has been made while issuing it. Not sure how to cancel a cheque? Do not worry, we will discuss how to do it in detail.

How to cancel a cheque?

When you have to submit a cancelled cheque, you might feel this is a complicated process or be afraid to do so. However, that is a myth, and the truth is quite the opposite. There are many reasons for issuing a cancelled cheque, but the most common is when you apply for a loan, an EMI, or insurance. Apart from these, the EPF and other organisations also ask you to submit a cancelled cheque as a necessary document and other proofs.

So the steps on how to cancel a cheque are given below:

1. Take a new cheque that you want to cancel from your chequebook. Do not sign anywhere on it.
2. Now, draw two parallel lines across the cheque.
3. Lastly, write “CANCELLED” between those two lines made earlier in capital letters.
4. Write the date mentioned at the start of this article as an extra security layer. i.e., the same day and month as today but the year to be the previous one.

Points you need to keep in mind while cancelling a cheque

1. It is essential to be careful while drawing parallel lines across the cheque so that it doesn’t cover any crucial details. Such as the account number, your name, IFSC code, MIRC code, bank branch address, etc.
2. If you want to cancel the cheque due to an error you made, you could start the process from step 3.
3. Do not sign the cheque.
4. Inform the bank of the cheque number and mark it as cancelled.

Purpose of cancelled cheques

A cancelled cheque might not be used for withdrawing money, but there are many other purposes for which these are used. Some of those are listed below:

1. Know your customer (KYC): Cancelled cheques can be held useful for identity proof purposes. Your cheque contains the name, account number, and bank branch address.
2. Equated Monthly Installments (EMIs): Before enabling an individual to EMI options, a bank or a company concerned seeks a cancelled cheque. Only then are such monthly instalment options activated.
3. Insurance Policies: Insurance companies ask for a cancelled cheque if you buy a policy for yourself or your family.

Conclusion

A cancelled cheque contains your bank account number, your name as per the official bank records, the IFSC code, the MICR code, the name of the bank, etc. Yet, no one can use it for fraudulent purposes if you follow the tips provided by our experts. You are now aware of how to cancel a cheque and make it non-payable. Share this vital information with your friends and family. If you are looking for more details on bank-related stuff, approach a reliable source, which can be any financial institution such as Piramal Finance. A financial expert like Piramal Finance offers you accurate and authentic information on banks and their procedures. Visit us now!