You must be familiar with the term ‘IFSC Code’ if you have transferred funds to another bank account. You may also have noticed the IFSC printed on bank chequebooks. While IFSCs are commonly used now, do you know why this code system was set up and what it aims to fulfil? Here’s a bit of background behind IFSC and its meaning.
Table of Contents
What is an IFSC Code?
IFSC, short for the Indian Financial System Code is an 11-digit alphanumeric code unique to each bank branch in India, which is used for online money transfers through NEFT, RTGS and IMPS. IFSC helps identify the source and destination bank branches for transactions.
Indian Financial System Code (IFSC) Format
- The first four characters represent the bank name
- The fifth character is always zero
- The last six characters are the branch code
IFSCs are allotted by the Reserve Bank of India (RBI). These codes are unique, meaning that no two banks or branches can have the same code.
The Importance of IFSC Code
Now that you know what IFSC is, let’s talk about its importance in the banking system.
- IFSC helps uniquely identify the bank and the branch where the beneficiary account is located. It ensures that the funds are transferred to the correct bank account and avoids any errors or delays in the process. Let’s understand this via an IFSC code example. IFSC for the Nariman Point branch of DBS Bank is DBSS0IN0811, where DBSS represents the bank name, 0 is for future use, and IN0811 denotes the branch code.
- IFSC facilitates paperless money transactions through various electronic payment tools, such as RTGS, IMPS and NEFT. These tools allow instant or same-day fund transfers across different banks without the need for physical cheques or cash. Thus, this digital method is both speedy and eco-friendly.
- IFSC facilitates various online transactions, such as paying bills, insurance premiums, loan EMIs and taxes. It also allows you to conduct e-commerce purchases and send money to friends and family. Thus, it enables you to access your bank accounts anytime and anywhere and enjoy a hassle-free banking experience.
- IFSC helps track and monitor your transactions, thus reducing the risk of fraud or misuse of funds. With IFSC, the RBI can monitor and regulate all electronic transactions in the financial and banking system. This promotes transparency and accountability in the banking sector and protects consumer interests.
Why is an IFSC Code Required?
- IFSC code helps the RBI 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.
- You require the recipient’s IFSC for initiating electronic fund transfers.
- IFSC acts as a confirmation parameter of the incoming money and ensures that it has been routed to the accurate destination.
How Does IFSC Code Work?
This 11-digit alphanumeric code identifies a specific bank branch and facilitates electronic fund transfers. It is essential to provide both the account number and the branch-specific IFSC for accurate fund transfers through NEFT / RTGS / IMPS. For example, if you want to transfer money to your friend’s account in HDFC Bank (Sector 18, Noida branch), you must enter their account number (xxxx xxxx xxxx xxxx) and IFSC (HDFC0000128).
IFSCs are not just limited to fund transfers; you may also use them to invest in mutual fund schemes or insurance plans for yourself or your loved ones. IFSC ensures that the money is deducted from the correct account and credited to the right beneficiary. The RBI’s National Clearing Cell monitors these transactions to ensure accuracy and security.
You can find your bank branch’s IFSC via your chequebook, passbook or monthly account statement. Alternatively, you can search for the IFSC online by entering the bank name, state, district and branch name.
Each bank branch has a distinct IFSC that differentiates it from other branches of the same bank or different banks. This helps in avoiding any confusion or error in electronic transactions. Therefore, it is vital to check IFSC carefully before initiating any fund transfer or online purchase.
Example of IFSC code
For example, IFSC for the Langford Road branch of ICICI Bank is ICIC0000269, where ICIC represents the bank name, 0 is for future use, and 000269 denotes the branch code.
Features of IFSC Codes
- IFSCs facilitate smooth and hassle-free online funds transfers in India. They are mandatory for electronic transfers via NEFT, RTGS and IMPS as they help identify the source and destination of funds.
- The RBI uses IFSCs to monitor banking transactions and ensure they are processed correctly. By using IFSC, the chances of errors in fund transfers are reduced, as the system can verify the bank and branch details of the sender and receiver.
- IFSC enhances the security of fund transfers, as it prevents fraudulent activities and misuse of funds. IFSC acts as a safeguard against unauthorised transactions, as it requires you to enter the correct code, along with other details like account number and name. IFSC also helps track and trace transactions in case of any disputes or complaints.
Methods to Transfer Money by Using IFSC Code
IFSC is used to transfer funds through three primary electronic fund transfer modes – NEFT, RTGS and IMPS. These electronic fund transfer systems enable you to easily transfer money from one account to another. They reduce the chances of errors in a transaction as the fund transfers are authorised only if accurate details like bank account numbers and the bank-specific IFSC are validated.
National Electronic Fund Transfer (NEFT)
NEFT or 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 the RBI. All NEFT settlements are made in a batch-wise format, and funds can be sent through NEFT to 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.
Real Time Gross Settlement (RTGS)
RTGS or 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 you 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.
Immediate Payment Service (IMPS)
Immediate Payment Service is a real-time electronic fund transfer method where the money is credited instantly to the payee or beneficiary account. It can be carried out at any time on a 24/7 basis. In this system, interbank transfers can be initiated via multiple channels such as SMS, ATM, mobile banking, NetBanking, etc. The primary advantage of IMPS over RTGS and NEFT is that the facility can be availed around the clock.
How to Search for the IFSC Code?
If you are wondering how to search for an IFSC code, here are four methods to find the IFSC for a bank branch:
The IFSC is usually printed at the end of the branch address on the top left corner of the cheque leaf.
Bank Account Passbook
The front sheet of your bank passbook contains the account and branch details, including the IFSC. It is usually printed on the top right corner of the front sheet.
The RBI website has a tab for ‘IFSC’, where you can search for the IFSC by entering the bank or branch name.
Branch Locator tool
Most banks have a Branch Locator tool on their official website. You can use it to find the IFSC for a specific branch by entering the state, city and branch name. For example, if you enter “Uttar Pradesh” in the state field, “Lucknow” in the city field, and “Lucknow Main Branch” in the branch name field, your screen will display the IFSC of this branch.
It is crucial to enter the correct IFSC during an online transfer, as it ensures that the funds reach the intended recipient. If you enter an incorrect IFSC, your bank will decline the transaction.
When searching for an IFSC, keep the following things in mind
- You cannot find an IFSC using your account number. The account number is unique to your account and does not change even if you change your branch. However, the IFSC changes when you change your branch.
- IFSC and SWIFT codes are two distinct codes used for online fund transfers, but they have certain differences.
- IFSCs are used for domestic transfers within India, while SWIFT codes are used for international transfers across countries.
- IFSCs are 11-digit alphanumeric codes that identify a bank branch in India, while SWIFT codes are 8 or 11-digit alphanumeric codes that identify a bank or a bank branch globally.
What is MICR Code?
MICR is an acronym for Magnetic Ink Character Recognition. MICR code is a nine-digit code that speeds up the processing of cheques. MICR codes are unique for each bank branch and play a vital role in identifying both the bank and the branch participating in an Electronic Clearing System (ECS), which is a method of transferring funds electronically.
A MICR code has three essential components that provide information about the location, bank and branch of the cheque issuer. The structure of a MICR code is as follows –
- The first three digits represent the city code, which indicates the city where the bank branch is located.
- The middle three digits represent the specific bank code, which identifies the bank that issued the cheque.
- The last three digits represent the unique branch code, which distinguishes the branch of the bank from other branches.
Where to Find the IFSC & MICR Codes on a Cheque?
You can easily find both the IFSC and MICR codes on the bank’s chequebook and passbook. The IFSC is printed on the top of the cheque leaf, while the MICR code is printed on the bottom of the same leaf. You can also find both these codes on the first page of the passbook provided by the bank branch.
Differences between IFSC, MICR and SWIFT Codes
Online fund transfers via NEFT, IMPS and RTGS
Verifies the authenticity and validity of the cheque and aids in quick processing
Is approved by the International Organisation for Standardisation (ISO); identifies the bank and branch of the sender and receiver of funds
Interesting Facts about IFSC Codes
- 1,30,000 codes: Currently, there are around 1,30,000 IFSCs assigned by the RBI to various banks and branches. These codes help in the clear identification of banks and branches to ensure that money transfers are made to the right beneficiary. The RBI maintains a database of IFSCs and continually reviews them, making additions and deletions to the list as required. You can view the complete list of IFSCs by the RBI here.
- Sublet branches: All major banks and their branches are allotted individual IFSCs 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 which are not assigned IFSCs 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 IFSCs.
- IFSCs for Payments Banks: Payments banks are a new banking model recently introduced by the RBI. They are allowed to conduct certain banking functions, like accepting deposits (up to Rs. 1 lakh) and provide facilities like NetBanking, mobile banking, debit cards and ATM facilities. However, any form of lending (or issuing credit cards) is not allowed.
- Currently, 4 players (Airtel, India Posts, PayTM and Fino) have been awarded Payments Bank licenses. These payments banks are allotted individual IFSCs.
- For example, Airtel Payments Bank has only one branch registered so far, which has the IFSC – AIRP0000001.
IFSC codes of top banks in India
|Bank Name||IFSC CODE|
|Bank of india||BKID0008426|
|UNION bank of india||UBIN0530786|
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
1. How do I receive my IFSC code?
Usually, IFSC can be found in the chequebook provided by the bank. It can also be found on the front page of your passbook.
2. What is the IFSC code used for?
It is used for electronic fund transfers in India via IMPS, NEFT and RTGS.
3. What is the meaning of IFSC codes?
IFSC is a unique identification code that is used to identify the bank and branch of a particular bank account. It is used across multiple electronic bank transfer systems in India.
4. Is IFSC code only for India?
Yes, this code is used only for transactions conducted within India. For foreign transactions, the SWIFT code is used.
5. Is it safe to give the bank IFSC code?
Yes, it is safe to share your bank IFSC. The transaction can only be completed if the other person knows your bank account number, name and IFSC.
6. Can I transfer money without an IFSC code?
No. This code is mandatory for conducting online transactions through NEFT, IMPS or RTGS.
7. Is the IFSC code the same for a branch?
Yes, it will be the same for all the customers of a particular bank’s specific branch. For example, customers of SBI Lucknow’s Main Branch will have the same IFSC.