What is an IFSC Code?
Importance of IFSC Code in making online money transfers
- An IFSC Code is an 11-digit alpha-numeric code assigned to all bank branches by the Reserve Bank of India.
- The IFSC Code is mandatory for any online fund transfer through RTGS, IMPS or NEFT.
- An IFSC Code is unique, and no two branches of any bank can have the same code.
- Transferring funds with IFSC Code is secure, convenient and hassle-free.
- The RBI can track all electronic transactions in the financial and banking system with the IFSC Code.
When you initiate online fund transfers, you have to provide the basic details of beneficiaries such as their name, bank and branch names, bank account number and IFSC code. While the former credentials are self-explanatory and easy to obtain from beneficiaries, the latter is a unique code that plays a crucial role in online fund transfer transactions. Let us understand what is IFSC code of bank.
What is an IFSC Code?
The Reserve Bank of India allocates an 11-digit alpha-numeric code to all bank branches, referred to as the Indian Financial System Code (IFSC Code).
The IFSC Code is mandatory for making an online fund transfer through Real Time Gross Settlement (RTGS), Immediate Payment Service (IMPS) and the National Electronic Fund Transfer (NEFT).
Each code is unique, and no two branches will ever have the same code. Banks also rely on a 9-digit unique code called Magnetic Ink Character Recognition (MICR Code) to identify bank and bank branches in the ECS for fund transfer via cheque.
Decoding the IFSC Code
In an IFSC Code, the first four digits represent the bank, while the last six characters represent the branch. The 5th character is zero.
For instance, the 11-digit IFSC Code for the Nariman Point branch of DBS Bank is DBSS0IN0811. The first four letters (DBSS) represent the bank, and the last six digits (IN0811) represents a specific branch code.
Benefits of IFSC Code
- IFSC Code helps to facilitate the electronic transfer of funds, making it secure, convenient and hassle-free.
- It facilitates paperless money transactions.
- It allows quick validation and reconciliation.
- IFSC Code plays a crucial role in maintaining communication between the sender and the recipient.
- With the IFSC Code, the RBI can manage and track all electronic transactions in the financial and banking system.
IFSC Code Search
There are several ways to find out the IFSC Code of your bank branch:
- The 11-digit alpha-numeric IFSC code on the first page of your cheque book, featuring your name and bank account details. It is typically printed on the lower middle side of every cheque leaf.
- You can also find the IFSC Code for your branch on your bank passbook and bank statement.
- If you do not have your cheque book or passbook while making the transfer, you can directly look up the IFSC Code on the official website of your bank.
- If your beneficiary has an account in a different bank account, you can find the IFSC code of such account holders by running a quick internet search, mentioning their bank and branch name.
ISFC codes are crucial to electronic funds transfers, and so you must ensure you enter the correct code during the fund transfer process. Entering the wrong code may result in your funds getting credited into the wrong account, or the transaction may fail to go through.
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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.