You must be familiar with the term IFSC code if you have transferred funds to another account. IFSC codes are used to make money transfers and you must have noticed the IFSC code printed on bank checkbooks. While IFSC codes are commonly used now, do you know why it was set up and what the code system aims to fulfill? Here’s a bit of background and meaning of IFSC codes.
What is an IFSC code?
An IFSC code is a unique identification code that is used to identify the bank and branch of any particular bank account and is used in bank transfer systems like NEFT, RTGS, and IMPS. IFSC stands for ‘Indian Financial System Code’ and forms an essential part of the Indian banking infrastructure.
Every code contains 11 alphanumeric characters. The first four characters are alphabets and used to identify the bank name; the last six characters are numeric or alphanumeric and used to indicate the branch code. The fifth character in the code is zero and always remains constant for all codes.
Example of IFSC code
IFSC Code: PUNB 0 392500
The first four characters are PUNB, which refers to Punjab National Bank. The last six characters refer to the particular branch of the bank, which in this case is Mahalakshmi Layout Branch, Bangalore.
IFSC codes are allotted by the Reserve Bank of India (RBI) and these codes are unique, meaning that no two banks or branches can have the same code.
Features of IFSC codes
- It uniquely identifies a specific bank branch based on the code assigned to it.
- Eliminates errors in the fund transfer procedures.
- Facilitates all electronic payment services such as NEFT, RTGS, and IMPS.
NOTE: The IFSC cannot be revised or changed or updated by the bank unless there is a reorganization or merger.
Format of IFSC code
As mentioned above, the first 4 characters of an IFSC code show alphabets that relates to bank names. The code of each branch of the same bank starts with the same 4 characters. This is followed by a 0, after which the proceeding 6 characters are numbers or digits that depict branch codes.
Interesting facts about IFSC Codes
- 130,000 codes – Currently there are around 130,000 IFSC codes assigned by the RBI to various banks and branches. These codes help in the clear identification of banks and branches so as to ensure that the money transfers are made to the right beneficiary at the right bank branch. The RBI maintains a database of IFSC codes and continually reviews makes additions and deletions to the list based on requirements. You can view the complete list of IFSC codes by the RBI here.
- Sublet Branches – All major banks and their branches are allotted individual IFSC codes and are easily identifiable by their codes; for example – SBIN0003357, refers to a branch of the State Bank of India or SBI). Sublet branches refer to small banks, like co-operative banks who are not assigned IFSC codes that are easily identifiable by bank names. For instance, YESB0NCCB01 could be easily mistaken for a branch of Yes Bank, while in reality, the code is used by The Nawada Central Co-operative Bank. These small banks, essentially piggyback on bigger banks for processing IFSC codes.
- IFSC codes for Payment Banks – Payment Banks are a new banking model introduced by RBI, earlier this year. Payment banks are allowed to do certain banking functions like accepting deposits (up to INR 1 lakh) and provide facilities like Net banking, mobile banking, debit cards, and ATM facilities to their customers. However, any form of lending (or issuing credit cards) is not allowed. Currently, there are 4 players (Airtel, India Posts, PayTM, and Fino) who have been awarded Payment Bank licenses. And in the context of IFSC codes, Payment banks are allotted their own individual IFSC codes. For eg, Airtel Payments Bank has only one branch registered so far –
"Bank": "AIRTEL PAYMENTS BANK LIMITED" "IFSC": "AIRP0000001" "Branch": "AIRTEL PAYMENTS BRANCH" "Address": "AIRTEL CENTER, PLAT NO-16, UDYOG VIHAR PHASE-4 GURGOAN" "City": "Gurgaon" "State": "Haryana"
IFSC codes of top banks in India
|Bank Name||IFSC CODE|
|Bank of india||BKID0008426|
|UNION bank of india||UBIN0530786|
Why is an IFSC code required?
- IFSC code is essential as it helps RBI to ensure smooth operations of all banking transactions without any blockers. This simple code can help the RBI track, monitor, and maintain all electronic 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.
- It acts as a confirmation parameter of the incoming money and ensures that it has been routed to the accurate destination.
Methods to transfer money by using IFSC Code
IFSC code is used to transfer funds through three primary electronic fund transfer modes – NEFT, RTGS, and IMPS. These electronic fund transfer systems enable customers to easily and quickly transfer money from one account to another.
These systems reduce the chances of errors in a transaction as the fund transfers are authorized only if accurate details like bank account numbers and the bank-specific IFSC are validated.
- NEFT: National Electronic Fund Transfer is a nationwide electronic fund transfer system that lets you transfer money from one bank account to another. It is a safe and hassle-free process as it is monitored by RBI. All NEFT settlements are made in a batch-wise format, and funds can be sent through NEFT to the accounts of all Indian NEFT-enabled banks. To initiate an 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.
- RTGS: RTGS (Real Time Gross Settlement) is a fund transfer method that facilitates sending and receiving money without any delay. This system allows the money sent by the remitter to reach the beneficiary instantly once the transaction is initiated. The processing of transactions happens on an individual basis and not in a batch-wise system.
- IMPS: Immediate Payment Service is a real-time electronic fund transfer method where the money is credited instantly to the payee or beneficiary account and it can be done at any time on a 24/7 basis. In this system, interbank transfers can be initiated 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.
How to search for IFSC code?
Your IFSC Code can be visibly printed on the top of the cheque page, while the MICR Code can be seen printed on the bottom side of the same. Also, the IFSC, as well as the MICR Code, can also be found on the first page of your passbook that is provided by the respective bank branch.
Difference between IFSC vs MICR
|It is used to facilitate electronic transactions from one account to another||It is a code generated to reduce the time taken to process cheques|
|It’s an 11-digit code||It’s a 9-digit code|
|The first 4 characters indicate the bank name||The first 3 characters indicate the city code|
|The proceeding characters indicate bank location||The proceeding characters indicate bank branch code|
Razorpay’s IFSC Toolkit
Handling a multitude of payments on an everyday basis, we discovered that we needed to process, validate and query several financial details, one of them being IFSC codes. We needed a system that could, easily, quickly, and accurately validate codes in order to ensure smooth payments processing. Without any complete API that suited all our requirements, we decided to build our own IFSC toolkit and even make it open source to help others in the industry.
Here’s exactly how we built the IFSC Toolkit:
- Get all the data from the RBI website
- Parse the data
- Export it
- And, finally release the updates,
The IFSC toolkit includes an API, the dataset downloads, and the source code to generate the entire dataset from the RBI website. You can find all these details at ifsc.razorpay.com. We have written more about razorpay IFSC Toolkit.
Frequently Asked Questions
How do I receive my IFSC code?
Usually, the IFSC code can be found on the checkbook provided by the bank. It can also be found on the front page of the account holder's passbook.
What is the meaning of IFSC codes?
An IFSC code is a unique identification code that is used to identify the bank and branch of any particular bank account and is used in multiple bank transfer systems.
Is IFSC code necessary?
Yes, the IFSC code is mandatory for all fund transfers from one bank account to another. It is used by code used by electronic payment system applications such as real-time gross settlement (RTGS), NEFT, and Centralised Funds Management System (CFMS).
Can we check the IFSC code by account number?
Yes, you can find the IFSC code with the account number. IFSC codes are allocated to bank branches and not to personal or other accounts. If you know the name of the bank and it matches the code of the branch, then you can easily find its IFSC code. If your account number has a branch code, it is often in the initial 5 figures of the account number.