Our country is making progress in the field of online banking. The Government of India wants that the money transaction monitored throughout the country. So that bribery, corruption, black money and tax evasion in government and private sectors can be stopped. Therefore, a lot of steps have been taken to make India digital, in which the Bhima app is very prominent. Not only this, but the impact of demonetisation also forced the people of India to try the technique of transferring money online. Along with this, Digital India also emphasizes online transactions. Due to the increase in all these things, many companies ask for a lot of documents for verification. So that they can get information about your bank account.
However, it is mostly sought by online investment, shares and insurance companies. One of these documents is a cancellated check and you must have heard its name as well. Whenever you want to take advantage of facilities like loans, fixed deposits (FDs) and mutual funds online, for this, you ask for a canned check to get your bank account information.
What is cheque
You should know about checks before a cancelled check. Actually, a form has been created to promote cashless technology. In which, the information related to the account, the account holder’s sign and the amount of money are filled in. This amount or amount should be filled as much as you want to give to the other.
Instead of money, this form is given and the form has been given the name of ‘Check’. After that amount, the bank removes it directly from your account and gives it to the person, in whose name you have issued the check. And the amount mentioned in it is deducted from your bank account.
Cancelled cheque meaning
Canceled checks are not a separate check given by the bank, but are just like your normal check. Which you can convert to cancellated check yourself. Whenever a check is written on a check, it means that the check is no longer of any use. It cannot be used to withdraw money.
How to create a cancelled check?
It is a very easy process to convert any normal check into a canceled check. You just have to draw two parallel lines on the check with the help of a pen. And ‘cancelled’ has to be written between them. After this your normal check is converted into a canceled check. Money cannot be transacted with this check.
What is the need of cancelled cheque?
A cancelled check is seen as a verification document, assuming you have issued your cancelled check to a bank or company. This means that your account is present in the bank whose check you have issued. Then the bank has given you the checkbook. So that your claim of having an account with that bank is proved on its own.
Seeing the second biggest need, such a check is also sought to get accurate and verified information. If a company or bank is asking for a cancelled check from you, then it wants to get verified and 100 per cent strong information about your bank account.
Cancelled cheque information
In general, any check contains about 5 types of information, which is very important. Similarly, in a cancellated check, the name of the account holder, the name of the bank in which the account is held, the account number, the bank’s IFSC code and MICR code (Magnetic Ink Character Recognition) are mentioned.
Signature on cancelled cheque
Sometimes some banks may also ask for your signature in this check, but consider your account security once before signing it. Because of this you may have to face loss as well. Because many companies commit this kind of fraud. Not only this, due to this information, anyone can also make money disappear from your account. So, if possible, give the unsigned canceled check only. It is not considered necessary to sign a canceled check anyway. However, if a company or bank asks for a signed check check from you. So you should give your signed cancellated check to the same company or bank, on which you trust a lot.
what is the use of a cancelled cheque?
Invested in mutual funds
If you want to invest in online mutual funds or are thinking of investing your money in a scheme. So you may have to use a cancellation check to verify your bank account. Because companies will do online verification by asking you to photocopy this check online and also get the necessary information about your bank account.
At the time of getting loan from bank
In today’s time, most banks do not like to give loans directly in the form of cash. Therefore, if you are successful in getting any kind of loan, then the entire money of the loan is transferred to your account. Whether it is any kind of loans like a home or residential loan, for business, an education loan. Therefore, the bank asks for a cancelled check for verification of your account and strong information.
For opening a demat account
Some important steps have to be taken to invest in the stock market, out of which you have to open a Demat account first. There are two ways to open it, either you go to the bank directly and open this account or you can apply by filling the online form. Not only this, a cancellous check can also be sought from you to confirm the bank’s information. However, this makes your work easy and you can easily start investing in the stock market online, that too without taking any detour from the bank.
To open a new account in the bank (opening a bank account)
Some banks ask for a cancelled check to open an account with their bank. However, it is used as a verified document to open a current account and a savings account. Not only this, it can also be used to conduct KYC in the bank.
You can also use a cancelled check while purchasing an insurance policy of any kind. Like you buy term insurance, health insurance, or money back policy. So the amount of insurance check related to you has been deposited, the insurance amount will be received in the same account.
Canceled cheque used for emi
It is often seen that people buy TVs, mobiles, cars and other items on EMI. Then they keep filling their easy instalments. Credit cards are used for this. At the same time, for a credit card, the company can ask for a cancellation check. So that your account can be easily connected to the EMI policy of the company and you keep deducting the instalment money from your account.
To withdraw money from EPF
If you want to withdraw all the money as soon as your EPF account matures, then along with the duty field, you have to give a canceled check, after which all your money will be sent to your account by the EPF institution.
Difference between bounce and cancelled check
Bank does not transfer money in bounced check and canceled check cases. But where canned check is used for verification of account with bank. On the other hand, the bounce of the check is not obeyed by the rules made by the bank.
A bounced check is declared by the bank itself and if a case of fraud comes to the fore, then appropriate action can also be taken. But it is up to the account holder to convert the check into a canceled check.
The reason for the formation of a bounced check is as if the amount in the check is less than the amount mentioned in the account. There may be a difference in date or time limit, the signature of the check and the signature present in the bank are to be found separately, but the canceled check is made intentionally.
Canceled checks do not have the power to transfer money. Not only this, the canceled check is written canceled in between. Whereas nothing like this is written in the bounce.
A bounced check can have a negative effect on the account holder, meaning it is impossible to re-use a bounced check. While cancellated checks are used in place of verification and other necessary documents.