A cancelled cheque, as the name suggests means that it has been cancelled by the issuer by drawing two parallel lines on it and writing ‘cancelled.’ What is cancelled cheque is a concept that may be clear to you. But what are misuses of a cancelled cheque? Read on and know more!
A cancelled cheque carries no monetary value. But it is still used by financial agencies and other channels in knowing more about the customer. In general term, it is a common Know Your Customer (KYC) documents utilized for bank account verification.
Even without having any monetary value, there have been reports of being misused. Thus, before handling anyone a cancelled cheque, you should also know if a scanned or photocopy of it or the first page of the passbook may be accepted. It is because even such papers also have all details of your bank account and may be of no use to the party being submitted.
A cancelled cheque may be required when you want to purchase any product on EMI and even to begin investing in investments such as mutual funds. More or less, a cancelled cheque can be used as KYC formalities.
Similarly, even for opening a Demat account, the issuing authority may need a cancelled cheque, along with the application form and other vital KYC documents.
You should not leave your cheque book unattended and also not issue a blank cheque to someone as shown in Bollywood blockbusters. It may be used for fraudulent activities, and you may be duped of hard-earned money.
Also, Read This: What is NACH Mandate | Types of NACH Mandate?
