A cancelled cheque is often required by employers for various administrative and financial purposes. Here are some common reasons why a cancelled cheque might be requested during the job application or onboarding process:
- Salary Processing: Employers often use the information on a cancelled cheque to set up salary payments through direct deposit. The cheque provides the necessary details, such as the employee's name, bank account number, and branch information.
- Verification of Bank Account: A cancelled cheque serves as a proof of the individual's bank account details. This is crucial for employers to ensure that they are making salary payments to the correct bank account.
- Employee Benefits: Some companies provide benefits like reimbursements, bonuses, or allowances directly to the employee's bank account. A cancelled cheque helps facilitate these transactions.
- EPF (Employee Provident Fund) and Other Deductions: In many countries, including India, employers contribute to the EPF on behalf of their employees. To ensure accurate contributions, a cancelled cheque is often required to verify bank account details.
- Loan or Advance Payments: If the company provides loans or advances to employees, they may use the cancelled cheque to verify bank details before processing these payments.
- Insurance and Other Deductions: Employers might use the information from a cancelled cheque to set up deductions for insurance premiums, union dues, or other authorized payments.
- Documentation and Record Keeping: A cancelled cheque serves as a tangible and official document that verifies the authenticity of the bank account details provided by the employee. It is often kept as part of the employment records for auditing and record-keeping purposes.
It's important to note that the specific reasons for requesting a cancelled cheque may vary from one organization to another. It's always a good practice to inquire with the HR department of the specific company about the purpose of providing a cancelled cheque and to ensure the security of personal information. If you're uncomfortable providing a cancelled cheque, consider discussing alternatives with the employer or HR representative.
