That the banking sector is evolving at a revolutionary speed is no hidden secret. Gone are the days of standing in long queues just to deposit or withdraw money. Today, you can make intra-bank transfers in seconds, and inter-bank transfers in minutes. What’s more, you can even send money to your loved ones in different corners of the world through online remittance facilities. For such kind of transfers, you need to provide certain details including bank and beneficiary details. One such critical detail you need to provide is known as the IBAN number. Let us find out what it is and its role in international money transfers.
An IBAN, or International Bank Account Number, is a standard system used to identify bank accounts across national borders. It was introduced with the aim of facilitating cross-border electronic bank payments. The IBAN number has maximum strength of 34 characters, and generally consists of the following parts or components:
Having explained what IBAN number means, let us decode why it is critical in international money transfers. IBAN is an internationally recognised code that helps avoid routing errors in international money transfers. The payment can be made in a reliable manner as the IBAN can validate the beneficiary account number. All the details needed to identify the account to which payment has to be made are present in the IBAN. For instance, if A is trying to make an overseas transfer to B, he can transfer money using IBAN number which comprises information like his country code, bank code and account number, among other things. This way, A can correctly identify B's unique bank account and send money into the right account.
Not all countries have adopted IBAN for their international payments systems. While many countries in Europe use IBAN numbers for overseas monetary transfers, India has not adopted the system yet. The length of IBANs varies from country to country, subject to a maximum length of 34 characters. Banks in several countries use alternative methods for international money transfers.
While making a money transfer it is critical that you get your IBAN number right. Say you are making a money transfer to an international account, but you get the IBAN wrong. In such a case, the money may be routed to an incorrect location or you may be penalised or charged for an invalid transaction. Finding your IBAN is easy, you can do so by logging into your internet banking or online banking portal or look for it in your account statement. There are also some online tools that you can use to generate your IBAN. Also, you can try and calculate the IBAN yourself. But make sure you crosscheck it with your bank to avoid any errors.
In India, we use IFSC (Indian Financial System Code) for domestic money transfers. An IFSC code is a unique identifier for bank branches across the country. When making online money transfers via RTGS, NEFT or IMPS, you need the IFSC code of the bank where the payees or beneficiaries have their account. You would usually find the IFSC code printed on the cheque book that your bank issues to you at the time of account opening or when requested.
For international money transfers, we use a bank identifier code called SWIFT (Society for Worldwide Interbank Financial Telecommunication) code. As stated earlier, SWIFT code helps identify the bank to where the payee has an account.
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While IBAN may still not be introduced in India, it is safe to say that you can have great use for it if your family is spread across different parts of the globe. So, if you are an NRI residing in the UK, and say your children are studying in Germany or France, you will need the IBAN numbers to make any money transfers to their accounts in those countries. With IBAN, you can remit money in a more convenient and hassle-fee manner.
Download the digibank by DBS app to do online international remittances safely and securely. Also, open your savings account with us.