IFSC

IFSC stands for Indian Financial System Code. It is a unique alphanumeric code of eleven digits which is used for online fund transactions done using NEFT, RTGS and IMPS services. Each branch of all banks has a unique IFSC. This code is assigned by the RBI and can be found on the cheque leaf issued by any bank. The RBI website also has a list of banks and their IFSC. A valid IFSC is required for initiating the various fund transfers done through Net Banking.

The IFSC cannot be revised or changed or updated by the bank unless there is a reorganization or merger. When SBI merged with five of its associate banks, it had to change the IFSC of several branches throughout the country.

IFSC Code: Key Features

• Uniquely identifies a specific bank branch
• Eliminates errors in the fund transfer procedures
• Facilitates all electronic payment services such as NEFT, RTGS and IMPS

IFSC shouldn't be confused with MICR Code. The MICR (Magnetic Ink Character Recognition Code) is a 9-digit code that also helps identify a particular branch of a bank. However, it comes of use in the Electronic Clearing System (ECS). ECS is used to clear cheques on a routine basis. The MICR code can also be found on the cheque leaves issued by the bank. It is also printed on the passbook issued to the account holder.

How Does IFSC Code Work

Let us follow the example of the State Bank of India IFSC code to better understand how the IFSC works in banking transactions. The IFSC code for the main branch of State Bank of India at Kolkata is SBIN0000001.

Here, SBIN represents the name of the bank, which is SBI. The "0" after "N" in the 5th position is for future use. The remaining six characters, 000001, specifically indicates a particular branch. It helps the RBI identify a bank branch.

When a fund transfer is initiated, a user has to provide the account number and the branch's IFSC code of the receiving account. Once the remitter enters all these details the money is sent to the account holder and IFSC helps avoid any errors in such transactions. This is how IFSC works. IFSC code is also used to purchase mutual funds and insurance and through net banking.

RBI's National Clearing Cell watches over all transactions. The IFSC code helps the RBI in keeping track of transactions and also enable fund transfers without any error. Each branch has a unique IFSC. Even if you have two accounts in two different branches of the same bank, the IFSC will be different.

Importance Indian Financial System Code

IFSC code is essential as it helps the RBI keep ensure the smooth working of all banking transactions without any blunders. This simple code can help the RBI track, oversee as well as seamlessly maintain all electronically carried out financial transactions such as NEFT, RTGS and IMPS.

IFSC code is important to the bank's customers because they need the payee's IFSC for initiating most of the electronic fund transfers.

IFSC code plays an essential role during fund transfers through IMPS, NEFT and RTGS as all these options are basically deal with inter-bank money transfers, although performed in different ways. The IFSC codes system forms a common thread amongst these varied options; it is a hypothetical plaque to identify a bank branch. It acts as a confirmation of the incoming money and ensures that it has been routed to the accurate destination.

Online money transfer using IFSC Code

Types of Online Fund Transfer in India

IFSC code is used to transfer funds through three electronic fund transfer modes - NEFT, RTGS and IMPS. These electronic fund transfers systems enable customers to easily and quickly transfer money from one account to another. Electronic transferring systems reduces the chances of errors in a transaction as the fund transfers are authorized only if accurate details like bank account number and the bank-specific IFSCare provided.

NEFT: NEFT or National Electronic Fund Transfer is a nation-wide electronic fund transfer system that lets you transfer money from one bank account to another. It is a safe and hassle-free process monitored by RBI. All NEFT settlements are made in a batch-wise manner. Funds can be sent through NEFT to the accounts of all Indian NEFT-enabled banks. To initiate a NEFT transfer, you would need the account number and name of the receiver along with the name of the bank branch and its IFSC Code. The facility has nominal charges and is available at specific timings. NEFT transactions remain inaccessible on all bank holidays.

RTGS: RTGS (Real Time Gross Settlement) is a fund transfer method which facilitates sending and receiving money in 'real time' basis without any delay. It is an electronic fund transfer system which allows the money sent by the remitter to reach the beneficiary instantly when the transaction is initiated. The processing of transactions happens on an individual basis and not in a batch-wise system; thus the term 'Gross Settlement' comes into play. RTGS is generally meant for transactions of larger value, typically Rs.2 lakh and above. The RTGS facility can be used for fund transfers through net banking. It is very important to collect some details from the receiver such as the account number, the name of the account holder, bank name and IFSC code before initiating an RTGS transaction. Another impressive feature of this wire transfer system is that the transactions can be scheduled in advance.

IMPS: IMPS (Immediate Payment Service) is a real-time electronic fund transfer method. Money is credited instantly to the payee or beneficiary account through IMPS and it can be done at any time on a 24/7 basis. It can be done on all 365 days, including on Sundays as well as other bank holidays. Interbank transfers can be initiated through IMPS via multiple channels such as SMS, ATMs, mobile banking, internet banking, etc. The primary advantage of IMPS over RTGS and NEFT is that the facility can be availed round the clock. The National Payments Corporation of India (NPCI) manages the IMPS services. An IMPS transfer through net banking requires the remitter to register the beneficiary. This can be done by providing all the necessary details like bank account number, the name of the bank and branch, along with its IFSC code, etc. IFSC stands for Indian Financial System Code, which is an 11-digit alphanumeric code assigned to all the branches of each bank by the RBI. It is a way to monitor and streamline the fund transfer process via IMPS. Each bank has a separate transaction charge for an IMPS transfer. The transaction fee, ranging anywhere from Rs.1 to Rs.7, depends on the amount that is being sent.

How to Transfer Money using IFSC

If you know about banking transactions well, you must already be aware of the two main ways of fund transfer. One is the old-fashioned way, wherein you physically walk into the bank to remit the cheque at the teller's counter; while the second is the electronic way through methods such as IMPS, NEFT or RTGS.

While dealing with the old-school 'visiting-the-bank' way, you don't need to register a beneficiary. However, the electronic method is significantly different and much more secure as well. So, how do you go about it? Read on to learn.

An individual is required to meet the following requirements in order to transfer funds electronically:

• You must first register for the bank's net banking facility.
• Then you should register for third-party (beneficiary from a different bank) transactions.
• Through the online banking portal, you must add the payee account as a beneficiary - irrespective of whether it is in the same bank or a different bank.

The process of Making Online Money Transfer

Mostly all banks of India facilitate online money transfer in the following way:

• Log in to the bank's net banking portal with your customer ID and password.
• Click on 'Third Party Transfer' tab.
• Receive the OTP on the registered mobile number after you fill the details and submit.

How to Register the Beneficiary's Account?

You will require details such as the name of the beneficiary, the account number, the IFSC code of the beneficiary's bank, and the name of the bank branch to register a beneficiary.

The registration is done once you submit the details. However, different banks take different time to approve the beneficiary. You may initiate a transaction only after the approval. If you have basic computer literacy, this process would be a cakewalk for you. Moreover, it is a highly convenient facility that can save you several trips to the bank.

Electronic money transfers using the IFSC involves a simple process after the initial set up. One may use Net banking, Mobile banking or UPI to do the same. The Net banking facility can be availed through the bank's website or the online banking portal. Most banks have simple and easy-to-use mobile applications for the same. UPI apps have come up recently and they are highly convenient - they let you transfer money even without the account number or IFSC of the beneficiary.

FAQs

What is the full form of IFSC?

It is Indian Financial System Code.

Why is IFSC used?

IFSC is an 11-digit alphanumeric code. It is used for unique identification of all bank branches in India.

How to know the bank name by IFSC code?

The initial four characters of the IFSC represents the bank name. For example, all ICICI bank accounts will have an IFSC that begins with the alphabets "ICIC" as in ICIC0001420.

What is a MICR code?

MICR refers to Magnetic Ink Character Recognition. It is generally printed on the bottom of a cheque leaf in a special ink which is sensitive to magnetic fields.

What is the use of MICR code?

It is a technology for verifying the originality of cheques or other physical documents. Banks mainly use it to process cheques faster. The RBI uses the MICR code to identify the bank branch.

How to transfer money between two accounts online?

Online money transfer can be done using the highly convenient systems such as NEFT, RTGS, IMPS and UPI .

Are IFSC and SWIFT code same?

No. IFSC is mainly used for fund transfers within India. SWIFT code is for fund transfers at an international level. Moreover, SWIFT identifies banks whereas IFSC identifies a specific bank branch.

Will the IFSC code change if the location of the bank branch is changed?

No, IFSC isn't related to the physical location of the branch. If the branch merges with another branch or entirely changes, then the IFSC will also be changed.

Is IFSC same as branch code?

No.

Is IFSC code required for IMPS?

It is required only if someone is transferring money using the bank account number. In case the receiver's MMID is unavailable, he/she must add the receiver as a beneficiary using details such as name, bank account number and IFSC.

Is IFSC code unique?

Yes, it is a unique alphanumeric code.

What are the timings for NEFT?

NEFT facility is available between 8 am - 7 pm on weekdays and between 8 am - 1 pm on Saturdays.

Can the IFSC be determined from the savings bank account number?

No, savings account number doesn't include the bank's IFSC code.

What happens when incorrect IFSC has been provided during a NEFT funds transfer?

For a successful NEFT transfer, the beneficiary's account number should match with the IFSC of the corresponding bank branch. The system will match the both. In case of an error, the amount will be refunded within a few hours.

Is the IFSC code mentioned in the bank passbook?

Yes, the IFSC code is printed in the bank passbook. It can be found on the first page that contains account information.