What is IFSC?
IFSC stands for Indian Financial System Code. It is a 11-digit alpha-numeric code that uniquely identifies a bank branch participating in any RBI regulated funds transfer system. The IFSC code helps to transfer money using RTGS, NEFT or IMPS method. The first 4 digits of the IFSC represent the bank and last 6 characters represent the branch. The 5th character is zero.
What are the benefits of IFSC?
- Enables Internet Banking- IFSC code is profoundly significant for online banking. The net banking users are needed to submit certain key facts including the IFSC code of the beneficiary’s bank branch in order to complete the fund transfer transaction smoothly.
- Transfering funds made easy and quick- Quick transfer of money is particularly a relief to those who wish to carry out transactions in emergencies as the IFSC code transaction takes only a couple of minutes to happen.
- Enabling NEFT/RTGS/IMPS payments- Transfers done with IFSC code are accurate and made in short span of time. For NEFT, there is no minimum and maximum limit to the funds transfer. With RTGS, the transactions are quickly operated and are supposedly one of the fastest modes of transfers. This makes banks demand drafts and cheques redundant.
- NEFT- National Electronic Fund Transfer
- RTGS- Real Time Gross Settlement (Transfer a minimum limit of Rs. 2 Lakhs)
- IMPS- Immediate Payment Service
- Identifying Banks- IFSC helps in identifying Banks and its respective branches. The 11 alphanumeric code of IFSC is structured in a pattern where the first four characters representing the name of the bank, while the last six characters represent the branch of the bank. The fifth character is generally 0 (zero) reserved for future utilization. The format of the IFS Code is shown below.
|Bank Code||0||Branch Code|
How can IFSC code help you Transfer your Money through NEFT/RTGS/IMPS?
The NEFT Option (National Electronic Fund Transfer)
- To start with, your bank branch should be NEFT-enabled. You can visit RBI’s (Reserve Bank of India) website to check and confirm so.
- Complete the registration process for your net banking account by creating a username and password. However, your mobile number should be registered with your bank to complete the net banking registration.
- Afterwards, you need to add the beneficiary to your account to whom you want to transfer the money. To do this, you will need the beneficiary’s name, her/his bank account number and the IFSC (Indian Financial System Code) of her/his bank branch. IFSC can be either found on the bank statement or on the cheque leaf.
- Once you have successfully added the beneficiary, there might be a waiting time (assigned by the bank) before you can transfer funds to the added beneficiary. Again, for instance, SBI has a waiting time of 4 hours.
- Once logged into your net banking account, go to the option of ‘Transfer Funds’, select the name of the particular beneficiary you want to transfer funds to and complete the transfer with the help of an OTP (One Time Password) sent to your registered mobile number.
- The amount will be transferred to the beneficiary as per the next settlement’s schedule.
The RTGS Option (Real Time Gross Settlement)
- RTGS transfer is basically meant for high-value funds transactions. The minimum amount that can be transferred through RTGS is Rs 2 lakhs. There isn’t any cap on maximum transfer. As this transfer takes place on a real-time basis, the individual to whom the amount is being transferred to will receive the amount in approximately 30 minutes.
- The RTGS service works from 9 am to 4:30 pm on weekdays and 9 am to 2 pm on Saturdays.
- The procedure to use RTGS service is same as NEFT. You simply need to make sure that your, as well as the beneficiary’s, bank accounts are RTGS-enabled and you have the IFSC code of his/her bank branch.
- RTGS is a bit costlier than NEFT, wherein a transfer of Rs 2- Rs 5 lakhs may cost you a fee of Rs 30, whereas the transactions above Rs 5 lakhs may cost you Rs 55.
The Immediate Payment Service (IMPS)
- IMPS is an instant fund service and works 24*7. It can be used 365 days a year to transfer funds to any other bank account. This service was introduced in 2010 by National Payments Corporation of India.
- You don’t have to register separately for IMPS service – once you are logged into your net banking account, you will get the option of transferring your funds either by NEFT, RTGS or IMPS. You can choose the IMPS option to carry out the transfer.
- Once again, you will need the beneficiary’s full name, her/his bank account number and IFSC code to complete the transfer. In case you transferring funds through the mobile app of your bank, you would also need MMID (Mobile Money Identifier) code for IMPS.
- MMID is a 7-digit number issued by the bank for IMPS service if the individual is using mobile banking as a beneficiary. Also, while conducting IMPS through mobile, there isn’t any need of the beneficiary to get registered.
- The charges for using IMPS is decided by the banks. However, usually the charge for fund transfer up to Rs 1 lakh is Rs 5 and for a transfer between Rs 1-2 lakhs is up to Rs 15.
What Is a MICR Code?
MICR is an acronym for Magnetic Ink Character Recognition. Primarily, this innovative technology authenticates the legality and credibility of paper-based document(s) in the banking database. It can be found on cheques. MICR is at par with IFSC as far as the security of a fund transfer is concerned.
MICR code is a product of highly advanced Character Recognition Technology (CRT) used by banks to verify cheques for clearance. MICR technology is used for other bank documents as well. An MICR code is placed at the bottom of a cheque. It includes details such the bank code, account details, amount, and cheque number, alongside a control indicator. The biggest advantage of MICR technology is that it stands out among similar concepts, such as barcodes, as MICR can be read and distinguished by humans very easily.
Difference between IFSC Code & MICR Code
As monetary transactions are not limited to financial institutions like banks, thorough verification is necessary before processing a transaction. To make the process faster, simpler and automatic, banks and other financial institutions rely on certain codes. These codes, namely, MICR Code and IFSC Code, play a significant role in verifying the authenticity of a transaction. However, there is a difference between the usage of both these codes.
Let’s gather a clear understanding of both and learn how they differ from each other-
|IFSC Code||MICR Code|
|It is used to facilitate electronic money transfer between the banks in India.||MICR code is initiated to make cheque processing simpler and faster.|
|IFSC Code is an 11-digit alpha-numeric code||MICR is a 9-digit code|
|The first four characters indicate the name of the bank.||The first three digits represent the city code where the bank branch is located.|
|Last 6 digits represent the bank location||Last three digits indicate the bank branch code.|
Different Methods of Fund Transfer with the Help of IFSC Code
The online process of fund transfer with the help of IFSC code is not that difficult as it seems. To the contrary, it is simpler and hassle-free. While processing fund transfer from one account to another, IFSC code is key information that facilitates the transfer. However, there are different methods of transferring funds with the help of IFSC code. Let’s take a look at these methods.
Almost every smartphone has apps these days. You can make the most of your bank’s apps available in google play/appstore. Moreover, you can also initiate fund transfer through an app. Here are few basic steps that you need to follow in order to transfer fund through a particular bank app.
- First and foremost, you need to have an activated net banking system for your account.
- Download the net banking app of your bank.
- Open the app; enter the login PIN or credentials, like the customer ID and password to open your account.
- Choose the option of fund transfer; you will see various options of third-party fund transfer like:
- Between My Accounts
- Within Bank
- Instant Transfer to Other Bank-IMPS
- To Other Bank- NEFT
- Via Visa Card
- Via Special Payment
- Choose the NEFT option of fund transfer.
- In case, you have not added the beneficiary, then first them by entering the name of the beneficiary, bank account number, and the IFSC code of the respective bank branch.
- Once you completed the process of registration, it will take around 5 mins- 12hrs to activate the beneficiary account for money transfer. This time period to link the accounts generally depends upon the bank policy.
- Once the beneficiary account is linked to your account, you can easily initiate an instant money transfer to the beneficiary’s account.
You can also transfer money through the SMS process with the help of an IFSC code. Let’s take a look at how you can transfer fund through SMS.
- 1.To transfer money through the process of SMS, first, you will need to link your mobile number to your bank account by registering your phone number for mobile banking.
- In order to register, you will be required to fill a form, after which a starter’s kit will be sent to you which will include a unique 7 digit number i.e. MMID and mPin.
- Once you get yourself registered, you will be required to create an SMS and type IMPS along with the beneficiary details like beneficiary name, account number, IFSC code of the beneficiary bank and the sum amount you want to transfer.
- Once you confirm the transaction, you will receive a confirmation message wherein you will have to enter your mPin.
- Press ok after entering the mPin, and the fund will be transferred to the beneficiary account. So, with these methods, you can easily transfer funds to the beneficiary account with the help of an IFSC code.
What is UPI?
An RBI regulated entity, National Payment Corporation of India (NPCI), has developed an instant payment system known as the Unified Payment Interface (UPI). UPI operates over IMPS infrastructure and allows instant transfer of money between any two bank accounts.