Learn About the Concept of Routing Numbers

A routing number is considered as a long code including nine digits which is utilized to recognize a financial body and the location where a bank account was opened. Banks utilize routing numbers so that they can direct the exchange of funds towards other banks and from other banks. A routing number can generally be found on the left corner at the bottom of a personal cheque. 

Over the last decade, the payment system of India has evolved. The major motive behind the creation of a routing number was to maintain the efficient distribution of paper checks on a large scale. A routing number is generally asked when an individual is making a payment online or by phone. A routing number can be found on bank websites or personal checks. 

Routing Codes in Indian Banks

• MICR code- Magnetic Ink Character Recognition is a technology-based system that uses MICR codes on cheques for clearing and sorting them. Every bank branch is given MICR code on the cheques they issue for cheque clearing purposes. It is given as- 

000 (City code) 000 (bank code) 000(branch code)

• IFSC- Indian Financial System Code is an eleven character alpha-numeric routing number for identifying the bank and its branch. It is based on the pattern followed by SWIFT (Society for Worldwide Interbank Financial Telecommunication). It is given as the first 4 characters identifying the bank, the fifth numeric is kept at zero and the last six characters identifying the bank branch.
• SWIFT Bank Identifier code- It is a unique routing code for each bank that is used when transferring money and messages between banks. It has 8 or 11 characters and 8 character codes are given to the primary office.

 It is given as

First 4 identifies bank code, next 2 characters referring country code(letters), next 2 is location code (letter or digit), last 3 is branch code (optional).

• Banking Statistical record code (BSR)-  This is 7 digit code that is used in payment systems like in tax receipts at the bank end or Government ends. The common customer is not affected by this code. Thus, BSR is not considered a routing code by the  CBS committee

AccountNumber 

An account number is an uncommon combination of numbers. Sometimes, an account number is known as letters, as well as other characters that identify the owner of an account and grant access to it.  The account number is a series of numbers that should not reach the wrong hands, if so then the person can transfer any funds out of your account. These numbers must be confidential and secured.

Significance of Routing Number and Account Number

Banks, as well as credit unions, tend to handle tens or hundreds of thousands and even millions of accounts. When you transfer money to or from your bank account, both routing number and account number are vital in ensuring the money gets deposited or withdrawn from the appropriate account.  

You’ll likely require a routing number and account number when establishing direct deposit, bill pay, as well as other kinds of bank transfers. On the other hand, wire transfers typically require a number other than your routing number. You can receive that number straight away from your bank or credit union. 

When to Give Your Account Number and Routing Number?

There are numerous scenarios in which you may be asked to provide your account number as well as the routing number in the modern money market. This involves :

1. When receiving a direct deposit from a manager 
2. When sending or receiving a wire transfer or maybe an electronic fund transfer (EFT). 
3. When receiving a tax fund or stimulus check. 
4. In case of scheduling an electronic ACH
5. In case of receiving a direct deposit of government advantage 
6. In case of paying online bills as well as mortgage 
7. When ordering checks again from your bank. 
8. In the case of linking bank accounts to a financial application 
9. While sending or receiving the money to friends and family.

Conclusion 

A routing number is known as a nine-digit code which is utilized to recognize a financial body that gives information on the respective bank, branch, location and origin of accounts. Banks utilize routing numbers so that they can direct the exchange of funds to and from other banks. A routing number can generally be found on the bottom left corner of personal checks. An account number is an uncommon combination of numbers. Sometimes, an account number is known as letters as well as other characters that identify the owner of an account and grant access to it.

When you transfer money to or from your bank account, both routing number and account number are vital in ensuring the money gets deposited or withdrawn from the appropriate account. You’ll likely require a routing number and account number when establishing direct deposit, bill pay, as well as other kinds of bank transfers.