A cancelled cheque that the bank has issued is marked with the word ‘CANCELLED’, suggesting that it is no longer valid for making payments. This marking is usually positioned across the front of the cheque between two parallel lines. The issuer rejects a cancelled cheque leaf to prevent it from being misused or cashed. This means it cannot be used for withdrawals. In this guide, we will explore the cancel cheque photo sample and how it is being used in real life.
Cancelled Cheque Photo
Cancelled cheque is a leaf with two diagonal lines drawn across cheque, and the term ‘CANCELLED’ was written between lines. Cancelled cheque images are often needed for KYC verification, setting up auto-debit instructions, or checking bank details. To understand it better, you should check a cancelled cheque sample.
Here is how a cancel check photo looks:
What Information Does a Cancelled Cheque Include?
A cancelled cheque photo includes important banking details without authorizing transactions. It encompasses:
Account Holder’s Details: Name and account number
Bank Information branch details, cheque number and IFSC code
Security Feature: MICR code
At its essence, cancelled cheque does not need signature of the account holder, which makes it a safe one for verification purposes in KYC, loan applications, and payment setups.
How to Cancel a Cheque?
Cancel cheque photo is often needed for KYC verification, recurring payments, and loan requests. You can follow these steps to cancel a cheque properly:
Step 1: Choose an Unused Cheque
Take a blank cheque from your chequebook.
Step 2: Draw two Parallel Lines
Use a pen to draw two parallel lines across the cheque to showcase Cancellation.
Step 3: Write ‘CANCELLED’ Properly
Write down the term ‘CANCELLED’ in bold, capital letters between the parallel lines, which ensure clarity and avoid misuse.
Step 4: Leave Other Fields Blank
Do not fill in other details like payee’s name, amount, or signature. Cancel cheque photo is just for reference and not for transactions.
Step 5: Make Important Details Visible
Ensure the clarity of some details like the bank name and branch address, the account holder’s name, account number, IFSC code, and MICR code.
What is a Cancelled Cheque For?
A cancel cheque photo is often used to confirm the bank account details and used for loan approvals, insurance policies, salary account setup, and EMI or mutual fund transactions.
By following the above-discussed steps, you can ensure that the cancelled cheque serves its purpose while ensuring the security of the banking details.
Here are some other use cases of a cancelled cheque:
Bank Account Verification
Financial organizations need a cancel cheque photo to confirm the bank account details while creating a new account, requesting a loan, or setting up electronic fund transfers. It assists the banks and NBFCs in validating your account details.
KYC Compliance
Cancelled cheques are necessary for KYC verification, which is being used for investing in mutual funds, stock markets, and financial programs. By submitting cancel cheque photo online, you can link your bank account to investment schemes. This ensures regulatory compliance and prevents fraudulence.
EPF Withdrawal
A cancelled cheque is important to check the bank account for fund transfer to withdraw funds from an Employee Provident Fund account.
Electronic Clearance Service
For smooth automatic transactions, banks need a cancel cheque photo to set up the Electronic Clearance Service. This enables businesses and people to authorize periodic fund transfers like salary payments, loan EMIs, and bill payments.
Automatic Bill Payments
A cancelled cheque is often needed to set up automatic bill payments for utilities, subscriptions, insurance premiums, and so on. This helps you reduce your burden and set the account on auto-debit.
Loan EMI Payments
While granting loans from the banks, a cancel cheque photo is required to activate Equated Monthly Installments. It activates automatic debits, ensuring on-time repayments.
Demat Setup
Although opening a Demat account for stock trading, financial organizations need a cancelled cheque to check the linked bank account for seamless transactions.
Risks Related to Cancelled Cheque
A cancelled cheque is a regular obligation for financial transactions, covering KYC verification, automatic payment set-up, and loan processing. Although it cannot be used for direct exchange, it still has sensitive information that could be used for malicious purposes if not managed effectively. Some of the risks associated with cancel cheque photo include:
Identity Theft
A cancel cheque photo shows important bank details like account number, bank name, and IFSC code. If it is accessed by the wrong people, the information can be used for malicious purposes, include unauthorized transactions or identity theft.
Data Security Breaches
Even when the cancel cheque photo is shared with reliable organizations, the cheque details could be at risk. There could be a risk of a security breach as cybercriminals can access and misuse the financial data, resulting in economic losses.
Unauthorized Transactions
Even if a cancel cheque photo is not used for direct withdrawals, fraudsters may try to receive unauthorized online transactions using the account details. Scammers may use the data to set up fabricated requirements or start unauthorized transfers.
How to Safeguard Cancelled Cheques?
Limit unnecessary sharing: Only offer a cancel cheque images when needed.
Mark it correctly: Write ‘For KYC purposes only’ or clarify the intended use to avoid misuse.
Ensure safe storage: Do not leave cancelled cheques unattended and store them safely.
Monitor your account: Regularly check bank statements for any unauthorized activity.
Summary
Cancelled cheques play significant role in banking and financial transactions. However, it may lead to the sensitive information. By ensuring the security and confidentiality of the cancel cheque photo, you can safeguard your sensitive information.
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