Cancelled Cheque

What is a Cancelled Cheque?

A cancelled cheque means a cheque leaf that has two parallel lines drawn across it with the word “CANCELLED” written between them, making it void for any payment.

A cancelled cheque leaf is simply a page from your cheque book that has been cancelled by drawing two parallel lines. It cannot be used to withdraw money, but it is commonly submitted as proof of bank account details for KYC, loans, EPF withdrawal, ECS, insurance, mutual funds, and Demat account verification.

A cancelled cheque usually contains the following details:

• Bank name
• Account number
• Account holder’s name
• IFSC code
• MICR code
• Branch details
• Cheque number

Cancelled Cheque Sample Image

The sample cancelled cheque image below shows how the word “CANCELLED” should be written between two parallel lines. Make sure the account holder name, account number, IFSC code, MICR code, bank name, branch details, and cheque number remain clearly visible.

Do not sign the cheque unless the bank, employer, or financial institution specifically asks for it.

Sample of a cancelled cheque leaf used for bank account verification

When do you need a Cancelled Cheque?

You will need a cancelled cheque under the following circumstances:

• Requirement of proof while creating an account with any bank, while applying for an insurance policy, a new Demat account, and withdrawal of PF.
• If you made a mistake when writing the cheque.

Things to be aware of while using a Cancelled Cheque

• On a cancelled cheque, always use black or blue ink. Other colours are not permitted.
• After using the cheque, shred it so no one can use it again.
• You can use the cheque several times.
• As long as the time details on the cancelled cheque remain valid, it is prone to fraudulent activities because it contains your account number, IFSC code, bank name and branch address, MICR code, and other information.

How to write a Cancelled Cheque?

Follow these steps to write a cancelled cheque correctly:

Step 1: Take a fresh cheque leaf

Take a fresh cheque leaf from your cheque book. Make sure the cheque is not torn, overwritten, or damaged, as unclear details may lead to rejection.

Step 2: Draw two parallel lines

Draw two parallel diagonal lines across the cheque. The lines should be visible, but they should not hide important details such as the account number, IFSC code, MICR code, bank name, or account holder name.

Step 3: Write “CANCELLED” between the lines

Write “CANCELLED” clearly in capital letters between the two lines. This is how you write “CANCELLED” on a cheque leaf — in capital letters, between two parallel diagonal lines.

Step 4: Do not fill in payment details

Do not write the payee name, amount, date, or any payment-related details. A cancelled cheque is used only for bank account verification, not for making a payment.

Step 5: Do not sign unless required

In most cases, you do not need to sign a cancelled cheque. Sign it only if the bank, employer, or financial institution specifically asks for your signature.

If you have made a mistake while writing a cheque, you can cancel it by drawing two parallel lines across the cheque and writing “CANCELLED” between them.

Try not to make the following mistakes:

• Don’t sign or write anything on the cancelled cheque. There is no need to put an entry on the cheque because miscreants can fraudulently use the details and signature to withdraw money from your account because the cheque serves as proof of your bank account.
• Make sure you don’t cover important information on the cancelled cheque, such as the account number, account holder’s name, MICR code, IFSC code, address of the bank where the account exists, and so on.
• Hand over the cancelled cheque only to the person concerned, the reason being the misuse of these misplaced cheques. 

Uses of Cancelled Cheques

You can use a cancelled cheque in the following situations:

1. New Bank Account Opening 

Banks would ask for the submission of a cancelled cheque while someone opens a bank account to complete the account opening process.

2. Loan Applications

Every bank would need you to submit a cancelled cheque while applying for a loan.

3. EMI Payments

Financial institutions would want you for a cancelled cheque when you buy any item on an EMI basis.

4. Mutual funds

The investment organisation requires you to submit a cancelled cheque to verify your KYC details when you invest in mutual funds.

5. EPF withdrawal

The EPO(Employee Provident Fund Organization) would demand a cancelled cheque to confirm that the concerned individual is you and not someone else if you withdraw your Provident Fund (PF) offline.

6. ECS(Electronic Clearance Service)

Banks would require a cancelled cheque if you opt for the Electronic Clearance Service (ECS) to deduct funds from your account automatically.

7. Insurance

Insurance companies would ask for cancelled cheques while issuing an insurance policy, be it money back, term, endowment, or health.

8. DEMAT ACCOUNT 

The stock brokerage needs the submission of a cancelled cheque along with a form for opening the account and other KYC documents such as proof of identity and address at the time of opening a Demat account.

9. Know Your Customer (KYC)

For banks, a cancelled cheque is relevant in KYC to prove active participation in stock investments and mutual funds.

Cancelled Cheque vs Bounced Cheque vs Stop Payment Cheque

Type	Meaning
Cancelled cheque	A cheque marked “CANCELLED” and used mainly for bank account verification.
Bounced cheque	A cheque rejected by the bank due to insufficient balance, signature mismatch, incorrect details, or another banking issue.
Stop payment cheque	A cheque for which the account holder has instructed the bank not to process payment.

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