IFSC stands for Indian Financial System Code. IFSC is an 11 digit alpha-numeric code. It is a unique identification code i.e. specific to a bank branch.
MICR code stands for Magnetic Ink Character Recognition. It is a nine-digit bar code. Many of you have seen the magnetic inks bar code printed on the bottom of your bank’s cheque leaves. Actually, the MICR is the name given to the technology used in printing the code.
- IFSC stands for Indian Financial System Code.
- IFSC is an 11 digit alpha-numeric code.
- It is a unique identification code i.e. specific to a bank branch.
- MICR code stands for Magnetic Ink Character Recognition, it is a nine-digit bar code.
- MICR is the name given to the technology used in printing the code.
What is IFSC Code?
IFSC (Indian Financial System Code) is a Unique Identification Code. It is provided to banks and their branches by the Reserve Bank of India (RBI). This code participates in the electronic fund settlement system which includes national electronic funds transfer (NEFT) and Real Time Gross Settlement (RTGS).
Of the 11 digits – first 4 alphabetic characters represent the bank, the fifth digit is Zero and rest 6 digits that are generally numeric and represents about the bank branch.
For example SBIN0003215. In this code, SBIN represents the bank and 003215 represent the Bank Branch.
The significance of the IFSC Code:
At the time of electronic fund transfer, IFSC code is made use of to send or route messages properly to the particular branches of any specific bank.
Also, the IFSC code is utilised by the fund transfer systems to recognise the origination and destination bank branches.
So, you can say that the appropriate functioning of NEFT and RTGS is extensively dependent on IFSC code.
What is MICR Code?
MICR is an acronym for Magnetic Ink Character Recognition which is a technology used in the banking industry in printing the MICR codes.
It is a 9-digit code that uniquely identifies a bank and a branch participating in an Electronic Clearing System (ECS).
The first three digit of the code represents the city code; the middle three digits of the code represent the bank code and last three digits represent the branch code.
You can see this MICR code at the bottom of the cheque leaf, just next to cheque number. It is also normally printed on the first page of a bank savings account passbook.
What is the use of MICR code?
MICR code is used in the processing of cheques by machines. This code enables faster processing of cheques. One is required to mention the MICR code while filling up various financial transactions such as investment forms or SIP forms or forms for transfer of funds etc.
How does MICR help speed up the processing of cheques?
In the case of manual clearing of cheques, there are chances of many human errors and it causes the subsequent delay in the clearing process. The MICR code on the cheque printed with a unique magnetic ink usually iron oxide has magnetic material present in it.
The MICR code is very clear and fine that the machine could read it even if the MICR code is not visible due to other marks or stamp on it.
The purpose of introducing the MICR is to reduce the paper based clearing process.
Where does an MICR number written on a cheque?
An MICR number on the cheque is written at the bottom of the cheque, on the right-hand side of the cheque number.