Cancelled Cheque meaning: When two transverse lines are drawn in the middle of the cheque from across one corner to another with words ” CANCELLED ” then such cheque are called cancelled cheque.
Purpose of drawing cancelled cheque: Cancelled cheque are issued when someone has to invest in financial investment like LIC, Mutual funds, Stocks, or similar investment, where the investor, later has to pay the amount in installment or pay premium for the said investment. The investment company ask for a cancelled cheque from the investor. The purpose of asking cancelled cheque is to gather bank account details of the investor like Account name, Name of Bank & Branch, IFSC Code and MICR Code. Since, it is cancelled therfore there is no chance where it can be misused to make fraud activities.
How to draw Cancelled cheque: Take a blank cheque, draw transverse lines in the middle of the cheque with word Cancelled. Now this cheque can easily be given to the investment company without getting worried for its getting misused.