Financial advisors say that when opening a Demat account or investing in a mutual fund, a canceled cheque should be given. Now let's see how to cancel. When you give someone a canceled cheque, just write 'canceled' on it. You do not need to sign. And the cheque should be cross-marked. Only blue and black ink should be used on canceled cheques. If any other color of ink is used, your cheque will be void.
It is common to be asked for a canceled cheque when dealing with financial matters. For example, whenever a personal loan, car loan, or home loan is taken, a cancellation cheque is requested. This cancellation cheque is requested to verify your bank account. If asked for a canceled cheque, he should give the cheque knowing what he is going to do with it. A canceled cheque should not be issued to a person who does not require it. A canceled cheque contains sensitive information related to your account, so there is a chance that it can be misused to fraudulently withdraw money from your account.
A canceled cheque is required for opening a Demat account, doing KYC with the bank, buying insurance, paying EMI, investing in mutual funds, withdrawing EPF money, and taking a bank loan. First, take out the new cheque from your chequebook that you want to cancel. Then draw two parallel diagonal lines across the cheque. 'Cancelled' should be written between two parallel lines. Do not sign anywhere on the canceled cheque. A signature is not required as this canceled cheque only contains the cheque number, MICR code, account number, account holder name, IFSC code, branch address, and other important details.
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