While adding a new beneficiary on your netbanking account to transfer money, other than beneficiary account details, banks ask about IFSC code. This code varies from bank to bank.
So, what is IFSC code and why is it important in banking? Let’s dive right in!
The IFSC Code or the “Indian Financial System Code” is a 11-character alphanumeric code that helps in identifying the branches of the bank, in which people have their accounts. This becomes important when they participate in different forms of money transfer, for example, National Electronic Funds Transfer or NEFT, Real-Time Gross Settlements or RTGS, Immediate Payment Service or IMPS and Unified Payment Interfaces or UPI.
The IFSC Code number can usually be found on the cheque book of the bank, or other documents of the bank, such as the passbook provided by the bank. IFSC Code number can also be found on the Internet banking website of that specific bank. One has to log in to their respective internet banking account and they can easily find their IFSC Code in their accounts. There are also websites in the public domain that enable tracking the IFSC codes of particular branches without having to login to bank accounts.
The IFSC Code facilitates safe transfer of money online through payment methods like NEFT, RTGS or IMPS. It is because of this IFSC Code that a bank can understand which branch of which bank the money is to be transferred. The IFSC Code helps the bank to recognize which exact branch of which exact bank the money should be transferred to. Without the IFSC Code, it would not have been possible for the banks to identify which branch of the bank the amount is to be transferred to.
There are a few key features of the IFSC Code that are to be kept in mind. The following are the key features of IFSC Code:
In order to understand the difference between the IFSC Code of a bank’s branch and the IFSC Code of credit card, we need to know what is credit card IFSC Code.
An IFSC Code of a credit card gives the opportunity to an individual to use National Electronic Funds Transfer or NEFT to pay off the bills on one’s credit. A distinct platform is provided by the Reserve Bank of India or the RBI which is used for this online transaction involving the credit card IFSC Code. NEFT or National Electronic Funds Transfer is one of the most popular methods for the transfer of funds in India other than the innumerable payment methods or ways a credit card user can avail to transfer funds online.
Meantime, the bank IFSC code is a code that identifies individual branches participating in the banking system, as defined above.
MICR Code or the Magnetic Ink Character Recognition Code is a unique code of 9 digits that is used to identify a bank and branch participating in the Electronic Clearing System or the ECS Credit scheme. The RBI or the Reserve Bank Of India assigns each branch a specific MICR Code. MICR Code and IFSC Code are both equally important for making financial transactions through the procedures such as NEFT, IMPS, and RTGS. MICR Code is instrumental in identifying the validity of a cheque as well as transferring the payments.
The magnetic ink code bars printed on the cheque leaf in a checkbook is a unique ink code that is known as the MICR code and it plays a very important role in banking transactions.
The IFSC is a 11-character alphanumeric code. There is a specific format of IFSC Code. The first four letters are alphabetic characters that represent the bank name, and the last six characters which are usually numeric, but can also sometimes be alphabetic, represent the branch. The fifth character is 0 and is reserved for future use.
This is an example of how an IFSC Code is formed:
|Bank Name||0||Branch Code|
For example, if we consider Axis Bank’s 11-digit IFSC code, the first four characters will be ‘UTIB’, and the last 6 characters usually represented by digits would indicate the branch code.
To search for the IFSC Code of a particular bank branch via net banking, the user has to first login into the net banking portal of their specific bank with the help of their User ID and password. Then under the menu section, there is an “Accounts” section. There, the user can find the IFSC Code of his or her particular branch. But one should always keep in mind that the net banking portal of every bank works differently.
There are also public websites that enable you to search for the IFSC Code of bank branches. You may simply need to sort or filter for the location of the branch by address, and you may be able to find the IFSC code for the particular branch you are looking for. It is, however, highly recommended that you verify the code with the branch before you proceed with transacting using the IFSC Code you may have got from such public sites.
There are a lot of vital and unique codes written on a cheque book of a bank. There is a specific cheque number, the MICR Code, and the IFSC code which is used for online payments like NEFT, RTGS, and IMPS. On the top left, the name of the bank is written, beneath that, there is the account number written, and underneath that, the IFSC Code is written. Sometimes, the IFSC Code is written beside the name of the bank also. One can find the IFSC Code in a cheque book there.
IFSC Code is an 11-digit alphanumeric code that is used to make online payments across the banks in India. The first four characters of the IFSC Code indicate the name of the bank and the last six digits indicate the specific branch of the bank. This code is developed by the RBI.
MICR Code is a 9-digit code that is used for the process of clearance of a cheque and is used to make the process faster and simpler. The first three characters of the MICR Code indicate the city code where the specific branch of the bank is located and the last three characters indicate the code of the branch of the specific bank in question. This code is also developed by the RBI.
The process for registering beneficiaries could vary from bank to bank. For illustrative purposes, we have taken HDFC Bank as an example.
Here’s how you can register the beneficiary’s account in HDFC Bank:
Step 1: Log in to your netbanking account with your netbanking ID and password
Step 2: Go to > Funds Transfer > Request > Add a Beneficiary
Step 3: Select the “Transaction Type” from Funds Transfer section in NetBanking and click on the “GO” icon
Step 4: For new beneficiary, provide their account number, bank, branch IFSC code
Step 5: It could take up to 30 minutes for beneficiary activation
For providing the IFSC Code of the beneficiary bank, there are two ways:
Without the IFSC Code, the bank would not be able to transfer funds through the online mode of payment. Also, there are underlying risks of carrying out transaction with a wrong IFSC code.
Ans: IFSC Code is an alphanumeric code that is a unique combination of 11 characters and MICR Code is a unique code of 9 digits and both the codes are issued by the RBI.
Ans: One can easily identify the name of the bank from an IFSC Code by just noticing the first 4 letters of the IFSC Code. For example, if the IFSC Code starts with “SBIN….”, then these letters represent the State Bank Of India or the SBI.
Ans: If you provide the wrong IFSC Code while transferring money, the money might get debited from your account but the beneficiary won’t receive it. Thus one should write the IFSC Code properly without any errors.
Ans: No, an IFSC code is different from a bank branch code.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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