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“Indian Financial System Code” is a code made of alphanumeric which facilitates banking services like electronic fund transfers in every region of India. The banking network in India is known as one of the most sophisticated networks among all the other banking services in the world. Although the banking services in India are regulated by the parent body of banking known as “Reserve Bank of India”. All the transactions in various banks are made with the help of the IFSC code and it helps the “Reserve Bank of India” to track the flow of money. This helps in monitoring the function of different banks in different regions which is very important in the development of banking services.
Indian Financial System Code or IFSC
The banking services of any nation are the backbone of the finances of the nation, which affect the development of the nation. The bank services need to be proper for supporting the development of the organisations in the nations and improvement in the economic condition of the nation. The development in services of banking in India is made by the “Reserve Bank of India” and the introduction of IFSC codes in the banking services has been made by the RBI. The development of services in the banking of a nation is done with the help of the rules and regulations of the RBI.
The “Indian Financial System Code or IFSC” consists of 11 alphanumeric characters as the code, which is used as a unique identification code in the bank. The alphanumeric code identifies the bank along with their branch as every bank and its branches have a unique IFSC code for their organisation. The first 4 digits of the 11 digits represent the bank, 5 the character in the code is “0” and the last 6 digits represent the bank’s branch. IFSC code is often seen in the usage of online banking, as the customers need to provide the details of the IFSC codes to which they are transferring the amount. IFSC codes are even used in adding beneficiaries to the account of any customers to facilitate transfers of funds in a smooth manner. This helps in making transfers real fast and easy using the bank application or websites by internet banking.
Use of IFSC code in Banking
The uses of IFSC can be seen in all the funds transfer happening through the bank’s internet banking and mobile banking service. The transfer of funds by the means of UPI is not considered in this kind of transfer. Although the transfers of money can be made with the help of IFSC if the customers are using UPI applications to transfer to any account without the UPI. The IFSC is used to transfer the funds by various processes like “NEFT, RTGS or IMPS method”, where the NEFT represents the “National Electronic Fund Transfer”. RTGS represents the “Real-Time Gross Statement” and IMPS represents the “Immediate Payment Service”.
The NEFT needs to have the beneficiary added to the bank account to make the fund transfer to another account no matter whether they are from the same bank or a different bank. The beneficiary is made with the help of the IFSC code, it can be found in the bank passbook or the cheque of the respective account. The same process is with RTGS but the difference is the amount and duration of the process, it takes less time than NEFT and range of transfer is more from Rs 2 Lakhs to Rs 5 Lakhs with a charge of Rs 30 per transaction. The charge per transaction can increase if the transferred amount is above Rs 5 Lakhs, and this service works from 9 am till 4: 30 pm on weekdays and till 2 pm on Saturday. The IFSC codes are also used in IMPS, this service IMPS work 24*7 with the help of MMID or mobile money identifier code, with 7 digits issued by the bank.
Difference between IFSC and MICR Code
In the transfer of funds, the IFSC and MICR are the codes used in transfers of funds but they are different from each other.
- IFSC is used as a service for electronic money transfers between banks or accounts in India. Whereas MICR codes are used in initiating cheques for processing it simpler and faster.
- IFSC code consists of 11 digits and MICR is 9 digits code.
- The first 4 digits of the codes of IFSC represent the bank of the account and in the case of MICR; the first 3 codes represent the city code of the bank.
- In the IFSC code, the last 6 digits represent the bank’s location and in MICR the last 3 digits represent the code of the branch.
Conclusion
IFSC can be known as the main ingredient for the fund transfer, which is used by the different modes of making the transfers. They are the identification of the account to which bank they belong and in what location. IFSC Code can be considered as a bank code that represents all the accounts opened in a branch. IFSC codes also act as the tracker which can be used to track fund transfers from one account to another.
