Decoding Banking: Current Account Features and the Importance of Cancelled Cheques

Almost every small, medium, or large company handles many daily transactions. Since effective cash management is integral to establishing a successful business, opening a current account is more than necessary. It is a non-interest-bearing bank account that business owners often use to serve their company’s needs. These accounts grant more transaction limits on cash deposits and withdrawals. Individuals, sole proprietors, partnership firms, LLP firms, HUFs, and public or private limited companies can open current account online to handle their cash flow better.

In the following sections, we will decode current account features and the importance of cancelled cheque in the banking sector.

Current Account Features

Here are a few notable features of a current account:

  • Higher cash deposit and withdrawal limits within or outside the city
  • Overdraft facilities are accessible based on financial documents, average account balance, and business transactions
  • Minimum balance requirement variable according to the type of your current account
  • Business Loan facilities
  • Global business expansion with trade and forex solutions
  • Simple and secure payment collection services
  • Easy payment collection with POS/QR/UPI integration
  • Quick fund transfers through net banking, mobile banking, etc.
  • No interest earnings, but attractive returns on idle funds with ActivMoney facility
  • A wide range of current account types you can open

What is a Cancelled Cheque?

A cancelled cheque is a crucial document that proves your identity and the existence of your bank account. You may use this paper to conduct numerous financial transactions, whether you want to open a fixed deposit or apply for a loan. It is nothing but a cheque that the bank uses and clears. They deposit this cheque into your account, where they process and clear it. Once it is clear, it becomes a cancelled cheque.

Purpose of a Cancelled Cheque

A cancelled cheque serves several purposes, including the following:

  • Identity Proof: The cheque with your name and address printed on it, with the bank’s stamp, serves as authentic identity proof.
  • Proof of Bank Account: It proves the existence of your bank account, which is necessary for various financial transactions.
  • Credit and Loan Applications: Finance companies often need a cancelled cheque to verify your identity and bank account when processing your credit or loan application.

Importance of a Cancelled Cheque

A cancelled cheque is an important document for various reasons, including the following:

Verification: It serves as proof of your identity and account existence. You will need it when performing various financial transactions. Moreover, it protects your account against a scam or fraud.

Convenience: This document is a convenient way to prove your identity and account, eliminating the requirement for any additional documentation and formalities.

Trust: Most financial institutions accept a cancelled cheque as proof of identity and account because they trust the verification and security processes that the banks use.

Digital Alternatives to a Cancelled Cheque

Since the dawn of the digital age, financial transactions no longer require a physical cancelled cheque. These are some digital alternatives to it:

  • Bank Statement: It records all transactions you perform from your account over a specific period. It serves as an authentic proof of your identity and account. You may obtain it from the bank.
  • EFT: Electronic Funds Transfer is a secure and convenient way to transfer money from one account to another without any physical cheques involved.
  • E-Payment Platforms: These days, people widely use e-Payment platforms to send or receive payments. Apart from carrying out financial transactions, they also serve as proof of identity and account.
  • Mobile Banking and Net Banking: Most reputable banks now offer mobile and net banking services, allowing accountholders to perform transactions on the go. These transactions also serve as identity and account proof.

A cancelled cheque is an important yet simple document that serves as your identity and account proof. Whether you want to apply for a loan, create a fixed deposit, or open a current account online, this document will be a necessary piece of document for various financial transactions.

Interesting Related Article: “The Future Of Banking: Exploring The Advantages Of Opening An Online Bank Account