07 May, 2025 | 11:20 IST
Banks and non-banking financial companies (NBFCs) may require a blank cheque from the personal loan applicants. The lenders ask for a blank cheque as a security against loan defaults, if any. It is signed by the account holder but need not contain the payee's name or the amount.
A blank cheque doesn't contain payee details or amount, except the account holder's signature. In some cases, the date is also mentioned. The payee's name and amount are usually left blank, which the recipient fills in later. If you are applying for a personal loan, understanding the importance of a blank cheque could be helpful in a hassle-free approval and quick disbursal.
It’s important to note that the requirement of a black cheque for a personal loan is not mandatory and it may differ depending on the lender’s policies.
Moneycontrol has partnered with eight lenders to offer fast, fully digital loans up to Rs 50 lakhs. The application process is easy to follow: enter your details, complete the KYC verification, and choose an EMI plan. Interest rates start at as low as 10.5% per year.
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A blank cheque is required for a personal loan for security purposes. Providing a blank cheque when applying for a loan is not mandatory. It may depend on the bank or the NBFC’s terms and conditions for personal loans. The lenders can fill in the amount and encash a blank cheque on the due date.
This is usually required so that lenders get an assurance that their money will not go anywhere. Even though cheques have mostly been replaced by digital transactions in banking, certain financial institutions still use them as a backup in case of missed payments.
If the borrower is unable to make timely payments, lenders may ask for a blank cheque to make sure they can recover the loan balance. The cheque may be used by the lender to take the outstanding amount from the borrower's bank account in the event of a default.
A blank cheque is also used as a payment method in cases when the borrower faces technical issues. A signed blank cheque is seen by financial organizations as a guarantee that the borrower will repay the loan in full. Additionally, it prevents borrowers from purposefully defaulting.
Providing a blank cheque is not mandatory; however, many lenders may ask for it as security. A blank cheque that has no payee name or amount on it could be misused if it ends up in the wrong hands. To avoid fraudulent use, borrowers must make sure that they keep a copy or record of all the cheques they have provided to the bank or NBFC.
Borrowers need to have a sufficient balance in the account so that the cheque doesn't bounce. If it happens, the borrower may face legal action.
Other than this, if the lender is not trustworthy, they could withdraw more than the agreed amount. Some lenders can try to use the cheque for extra fees or penalties without the borrower's permission.
Nowadays, the majority of lenders prefer NACH or ECS auto-debit mandates, which enable EMIs to be automatically deducted from your bank account without the need for blank cheques. Also, even if the lender insists on providing a blank cheque, the best way to reduce fraud is by filling in the lender's name and amount before handing it over.
If you are taking a secured personal loan (such as a gold loan or loan against FD), lenders may not require a blank cheque since they already have collateral as security.
If you are looking forward to applying for a personal loan, Moneycontrol offers multiple loans up to Rs 50 lakhs in partnership with eight lenders. The completely paperless application process ensures quick approval and disbursement. The loans come with an interest rate as low as 10.5% per annum.
Blank cheques are not required for personal loans, however, some lenders still ask for them. Instead of post-dated cheques, the majority of reputable financial institutions use digital repayment alternatives. Borrowers should move cautiously and look into alternate repayment options if a lender requests a blank cheque.
To prevent any issues in the future, make sure that all financial transactions are transparent and properly documented. If you are seeking a personal loan, find a lender with clear policies and avoid providing a blank cheque unless essential.
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