What do you mean by a cancelled cheque?

Take a cheque leaf

Write the following words in bold words across the cheque on its face

‘CANCELLED”

Now the cheque is treated as cancelled cheque

The bank will never pay any cancelled cheque and it is mere a piece of paper

Why cancelled cheque?

When a person is willing to invest in mutual funds schemes or any other investments, the investment agencies used to demand one cancelled cheque from the investor. They are not going to use the cancelled cheque; however, they use the cancelled cheque for getting some vital details as mentioned below:
- Account number
- IFSC code of the bank branch
-MICR code of the bank branch
- Name of the bank and branch
On maturity of the investment, they used to pay the amount directly to the credit of the account as provided by the customer
Many times, the customers knowingly or unknowingly provide wrong particulars and the obtention of cancelled cheque is to avoid such occurences.