What is IFSC code? All you need to know

[ecis2016.org] Know what IFSC code is and how it differs from MICR code. Read on to learn more about IFSC code benefits, its significance and how to transfer money using the IFSC code of a bank branch

IFS code is among the important bank details that one may require, when carrying out financial transactions online. IFSC code refers to the Indian Financial System Code. The Reserve Bank of India (RBI) allocates the IFS code to all banks across the country to facilitate the electronic funds transfer process. It is essential to provide this code, for transferring funds from one bank account to another through online banking, including National Electronic Fund Transfer (NEFT), RTGS and Immediate Payment System (IMPS).

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IFSC code meaning

The IFSC code, also known as the Indian Financial System Code, is a unique 11-character alphanumeric code with a combination of numbers and alphabets, issued by RBI to banks and their branches. The first four characters specify the bank’s name, the fifth character is zero, as per the RBI’s instructions to provide scope for expansion of the bank branch and the remaining six characters denote the location of the bank branch.

For example, mentioned below is an IFSC code:

ICIC0000399

• The characters ICIC refer to ICICI Bank.
• The fifth digit is zero.
• The last six digits refer to the code ICICI bank branch at Sec 54, Gurgaon, 122003, Haryana.

How to find IFSC code?

One can find the IFSC code in different ways:

• On every cheque leaf and on the bank passbook.
• One can go to the official website of the RBI and check the IFSC codes of banks and the list of branches.
• One can also visit the official website of the specified bank to know the IFSC codes of its various branches.

One can also refer to trusted third-party websites that provide financial information and search for IFSC code.

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If you want to search for the IFSC code of a bank branch, provide necessary details as given below:

• Pick the bank, for example, ICICI Bank, SBI, etc.
• Choose the specific state, e.g., Uttar Pradesh, Haryana, etc.
• Select the district and then, the branch, to find the IFSC code.

Why is the IFSC code important?

Without providing the valid IFSC code of the bank, individuals will not be able to initiate bank-related transactions online, such as NEFT, RTGS and IMPS. The code enables the identification of a specific bank branch in any location, thereby preventing errors during internet banking and transferring money online to any bank account.

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IFSC code benefits

Faster transfer of funds

One of the main uses of the IFSC code is to enable the transfer of funds from one bank to another through online transfer of funds. The IFSC code provides ease and convenience while saving time. So, when making online transactions, it is necessary to specify the IFSC code, along with the beneficiary’s bank account number and bank branch.

Mentioning the IFSC code of the recipient’s bank branch can facilitate the instant transfer of funds. The sender will be notified about the amount of money deducted from his or her bank account, while a similar notification will be sent to the receiver about the money credited to his or her account.

Prevents frauds and errors

Since the IFSC code is a way to identify a particular bank, it helps in secure transactions and prevents the chances of any mistakes or frauds.

The IFSC code helps customers to identify the correct bank and its branch while making online transactions.

Bills and other payments

Bank customers can pay their bills online and do transactions through the IFSC code-based systems.

How to transfer money with IFSC code?

For transferring funds using IFSC code, customers are required to first register the bank account of the individual to whom they wish to transfer money. They must register under the list of payees/beneficiaries for funds transfer through NEFT, RTGS and IMPS.

For this, they need to provide the beneficiary details, including the name of the account holder, the name of the bank, the account number, and the IFSC code.

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The customers should add the payee’s name while transferring funds online.

IFSC code for payment of credit card bills

The IFS code can be used while paying credit card bills through an internet banking facility. The transactions can be done by an individual also using a mobile.

Can the IFSC code be used for international transfer?

It is necessary to provide the IFSC code when transferring funds to any account within the country, while the SWIFT code (Society for Worldwide Interbank Financial Telecommunication) is required for transferring funds between banks for international wire transfers and exchanging other messages between banks.

Transfer funds through SMS

Customers also have the option to transfer money with the help of IFSC codes through the SMS facility using their mobile phones. Customers must follow the procedure explained below:

• Link your mobile number with your bank account by registering for mobile banking services.
• Request for mobile banking services and complete the application. Applicants will get a unique 7-digit number, also called MMID and mPIN.
• After registration, applicants should send an SMS by typing IMPS and payee details such as payee name, bank, branch, account number, IFSC code of the payee bank, and amount of money to be transferred.
• Confirm the transaction and send the SMS.
• A confirmation message will be sent.
• Enter the mPIN. Select ok. The fund will be transferred to the respective payee account.

IFSC code vs MICR code

All cheques contain a unique code known as the MICR code printed on them using MICR (Magnetic Ink Character Recognition) that enables quick processing of cheques. It is a nine-digit code where the first three digits denote the city, the next three digits provide the bank code, and the remaining three digits indicate the bank branch.

Just like an IFSC code, all bank branches are allocated a particular MICR code. It is important to understand the difference between the two codes. While the IFSC code is useful when performing fund transactions online, the MICR code is used for cheques.

What happens if my IFSC code is wrong?

When transferring funds online, one is required to enter the payee’s name. Most banks also verify the beneficiary’s name to ensure that funds are transferred to the right recipient. However, this is not mandatory for banks, as per the RBI regulations.

Further, the chances of errors are less when banks request customers to select bank name and branch name from the drop-down to search the IFSC code. Some banks also provide the option to type the IFSC code.

For example, if one has entered the IFSC code of SBI’s Chandni Chowk branch instead of Connaught Place where you wish to transfer the money, the transaction will not take place even if other details are entered correctly. Similarly, the transaction will also not happen if you have given the IFSC code of a different bank. Once money gets credited to the wrong bank account, it is usually difficult to reverse the transaction. Hence, it is essential to be careful when entering bank details during online transactions.

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