Top 10 Common Uses of a Cancelled Cheque in Banking

A cancelled cheque may look like a normal piece of paper with two lines and the word “Cancelled” written across it. But in Indian banking, it still plays an important role — it helps prove that a bank account belongs to you.

Banks, employers, and finance companies often need to confirm your account number, IFSC code, and branch. A cancelled cheque lets them do this safely. Because the cheque is marked “Cancelled,” no one can use it to take money from your account.

You may need a cancelled cheque for things like setting up loan EMIs, opening a trading account, or starting an SIP. Even though many services now verify details online, having a few cancelled cheques ready can still save you time.

What Details a Cancelled Cheque Confirms?

A cancelled cheque cannot be used to withdraw money, but it still shows important information printed by your bank:

• Account holder’s name – as it appears in bank records
• Account number – your unique savings or current account number
• IFSC code – required for online transfers
• Bank name and branch – confirms where the account is held
• Cheque number and MICR code – used by some systems for verification

Since these details are printed, they’re more reliable than handwritten notes. You don’t need to sign the cheque — just write “Cancelled” clearly across it.

Top 10 Common Uses of a Cancelled Cheque

A cancelled cheque is often used for account verification. Here are ten common reasons why you may be asked for one:

1.Electronic Clearing Service (ECS) or Auto-Debit Mandate

When you set up auto payments for EMIs, insurance, or utility bills, a cancelled cheque helps confirm your account number and IFSC code.

2.Demat or Trading Account Opening

Stockbrokers or depository participants use a cancelled cheque to link your bank account to your Demat or trading account. This ensures dividends and refunds go to the right account.

3.Initial Public Offering (IPO) Applications

Some IPOs may ask for a cancelled cheque to confirm your bank account for refunds or share allotments. While many platforms now verify details digitally, it’s still accepted as valid proof.

4.Mutual Fund Investments (SIP or Lump Sum)

Asset management companies often ask for a cancelled cheque to confirm your bank account before setting up SIP payments or redemptions. Some now use online verification instead.

5.Loan Applications

When you apply for a loan, banks may request a cancelled cheque to verify your account for EMI deductions. 

6.Employees’ Provident Fund (EPF) Withdrawal or Transfer

Earlier, the EPFO required a cancelled cheque to confirm your bank account for withdrawals.
But since April 2025, EPFO has made the process easier — if your bank account is already linked with your UAN, you no longer need to upload a cheque.

7.Insurance Claim or Maturity Payout

Insurance companies may ask for a cancelled cheque to confirm your account for claim settlements or maturity payments. This helps avoid errors and delays.

8.Salary Account Setup by Employers

When joining a new company, you might be asked for a cancelled cheque so that your salary is credited to the correct bank account.

9.Bank Account Opening (Certain Cases)

Most banks now use Aadhaar and PAN-based eKYC, but some still ask for a cancelled cheque when opening current accounts or business accounts.

10.EMI or NACH Mandate Registration

Finance companies may use a cancelled cheque while registering a National Automated Clearing House (NACH) mandate. This allows automatic EMI payments. However, digital NACH setups through eSign or Aadhaar now often make cheques optional.

Safety Tips When Sharing a Cancelled Cheque

A cancelled cheque is safe when handled properly. Follow these simple rules:

• Write “Cancelled” clearly: Draw two lines and write “Cancelled” in bold.
• Do not sign it: Your signature isn’t required.
• Share only with trusted parties: Avoid giving it to individuals.
• Keep a copy: Scan or photograph it for records.
• Never hand over a blank cheque: Always cancel it first.