A few months ago, a resident of Thane, Maharashtra, was robbed of ₹40,000 by miscreants who identified themselves as bank agents. The victim had applied to banks for a personal loan, and received calls from a fraudster who posed as a bank agent to procure cancelled cheques of the victim and later misused them. The fraud came to light when the victim got an alert message on his phone stating such a transaction was completed from his account. Read here.
This is not the first time when cancelled cheque leaves have become a tool of misuse.
When are they used
Cancelled cheques are, typically, used to prove that a certain account number belongs to you as they state your bank account number and name, among other details, and that the bank account is legitimate.
You may be asked to submit them for various reasons such as for completing the KYC process, setting up ECS, while applying for loans, or while initiating an SIP.
Your insurance company too could ask for a cancelled cheque leaf when you are buying or renewing a policy. If you are withdrawing your EPF, you will need to submit a cancelled cheque with the claim form to verify your account details. You may also need to furnish a cancelled cheque for opening a demat account.
What you can do
Cancelling a cheque in the right way is important so it does not become an instrument of abuse. Strike two parallel lines across the cheque leaf and write the word “cancelled" across the lines. Remember, there is no need for you to sign a cancelled cheque as it is only used to validate your account details and not make a transaction. Writing the word “cancelled" is a must. Try and use dark and waterproof ink.
Other than this, cross-check the identity of the person whom you are handing over the cancelled cheque to. If you have the time, walk up to the bank or the specific institution to complete the verification formalities to reduce the chances of someone faking his identity and misusing cancelled cheques.
If you feel like an unauthorised transaction has been made from your account, alert the bank immediately to recall or trace the transaction.