What Is IFSC?
Indian Financial System Code abbreviated as IFSC is a unique 11 digit code assigned by Reserve Bank of India, to all the bank branches to facilitate National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Immediate Payment Service (IMPS) and Centralized Funds Management System (CFMS). IFSC is required for almost all online modes of transfer of funds.
Features Of IFSC Code
- Unique IFSC is assigned to all bank branches
- IFSC is a 11 digit alpha-numeric code and the format of IFSC is as mentioned below
- The first 4 digits represent the bank name in short
- Fifth digit is usually 0
- Last 6 digits represent the bank branch
Importance Of IFSC Code
Errors are a basic human tendency. Typing errors while transferring funds could mean transferring funds to a wrong bank account and reversal can take a lot of time. You need to give an explanation to your bank and request for a reversal which may not be accepted. To avoid this kind of scenario, IFSC code was introduced. Today, RBI has enabled quick online transactions with the help of the IFSC code. Without IFSC code, you cannot perform NEFT, RTGS, IMPS and CFMS transactions.
How Does IFSC Code Work?
IFSC is a eleven digit alpha-numeric code. Each bank has a unique IFSC code. The first four digits represent name of the bank, fifth digit is usually 0 and the last six digits represent the bank branch. When a transaction is made using IFSC, a search will first be made for the bank, with the first four digits of IFSC. When the bank is found, a search will then be made for the bank branch using the last six digits of IFSC. When both the bank and branch are found, then the funds are transferred to the account number mentioned.
Advantages of IFSC
- Enables online transfer of funds
- Quick transfer of funds between bank accounts
- Prevents transfer of funds to wrong bank accounts
- Enables banks to validate and confirm the transfer of funds between the accounts
How To Check IFSC Code Of A Particular Bank Branch?
- Online: You can check IFSC of any bank branch above. You have to select the Bank followed by state, district and the bank branch.
- Cheque Book: All bank branches are mandated by RBI to mention IFSC code of their branch on all the cheque leaves issued to account holders.
- Call to Bank Branch: You can call a particular bank branch to get their IFSC code.
- Passbook: All the bank branches must mention IFSC code on the Passbooks issued to account holders.
How To Add Beneficiary In Fund Transfer Using IFSC Code?
Beneficiary is the person who holds the receiving account. Procedure for third party transfer of funds varies across banks. Below mentioned are the general steps to be followed:
- Log in to your net banking account using your customer ID and password.
- Click on ‘funds transfer’ option, new tab might be opened.
- Click on ‘add beneficiary option’.
- Enter the following details of the beneficiary:
- Full name of the beneficiary
- Account number
- IFSC Code
- Branch Name
How to transfer money online using IFSC?
Let’s go through the steps to be followed to transfer funds online using IFSC in different transfer options:
National Electronic Funds Transfer or NEFT, is an online mode of transferring funds. Individuals can transfer funds from their account to the beneficiary account online. For NEFT transfer, you need to have the following details of the beneficiary:
- Full name of the beneficiary
- Account number
- IFSC code
- Branch Name
Once you enter the beneficiary details, you will be asked to enter the amount to be transferred and press on the ‘submit’ button. Once you submit the request, your bank would send an electronic message to the NEFT center. The NEFT center would process the payment and will transfer the request back to your bank for the fund transfer clearance.
NEFT would also send an electronic message to the bank of the receiver saying funds are coming to the beneficiary account. Transferring banks will process fund transfer clearance on an hourly basis and transfer the funds to the beneficiary account. NEFT transfers can take up to 10 hours. NEFT transfer gets processed in batches and happens once each hour. Bank charges on NEFT would depend on the amount of money transferred.
If you don’t have net banking activated, then you can visit your bank branch and request them to perform NEFT on your behalf.
Real Time Gross Settlement or RTGS, allows you to transfer funds between banks. Unlike NEFT, RTGS is an instant transfer. A minimum of Rs 2 Lakh is needed for RTGS while there is no cap on the upper limit. You need to add beneficiary with all the details including the amount to be transferred and then click on submit.
Working of RTGS is similar to NEFT. Your bank would send an electronic message to the RTGS center upon receiving the request. The RTGS center would process your payment and transfer the request back to your bank for the fund clearance. RTGS center would also send an electronic message to the receiver’s bank, saying funds are being transferred to the beneficiary account. Transferring banks will process fund clearance immediately and transfer funds to beneficiary account.
If you don’t have net banking activated, then you can visit your bank branch and request for RTGS transfer by submitting an application.
Immediate Payment Service or IMPS, is an online mode of transferring money instantly using mobile phones. For IMPS, the account holders must first register under IMPS with banks. The banks would issue a 7 digit Mobile Money Identifier (MMID) and Mobile Banking Personal Identification Number (MPIN) to customers. For fund transfer, the sender needs to input either the beneficiary phone number or MMID and enter the amount to be transferred. After the transaction, both receiver and sender would receive an SMS confirmation. Customers can transfer up to Rs 50,000 a day through IMPS.
4. MICR Code
Magnetic Ink Character Recognition or MICR is a 9 digit numeric code, issued to all bank branches by RBI. MICR is printed on all cheque leaves and Demand Drafts (DD). There is a separate portion on cheques and DDs called the MICR portion, which is specially printed with magnetic ink at the time of printing. MICR comes in handy for quick clearance of cheques and DDs. The first three digits of MICR represent the bank, middle three digits represent the bank branch city and the last three digits represent the bank branch.
Difference Between IFSC code and MICR code
IFSC was developed to facilitate quick online transfer of funds, whereas MICR was developed to facilitate faster clearance of cheques and DDs. IFSC is an alphanumeric code while MICR is a numeric code. IFSC code is 11 digits while MICR is just 9 digits.