Most of us have heard of IFSC codes. We have used it to make money transfers and many might have even noticed the codes printed on bank cheque books. 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 on IFSC codes –
What are IFSC codes?
IFSC essentially stands for ‘Indian Financial System Code’ and forms an essential part of the Indian banking infrastructure. An IFSC code is a unique identification code that is used to identify the bank and branch of any particular bank account, and are used in bank transfer systems like NEFT, RTGS and IMPS.
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.
Here’s an example:
IFSC Code: PUNB 0 392500
The first four characters are PUNB, 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.
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 (upto Rs 1 lakh) and provide facilities like Net banking, mobile banking, debit cards and ATM facilities to its customers. However, any form of lending (or issuance credit cards) are not allowed. Currently there are 4 players (Airtel, India Posts, PayTM and Fino) who have been awarded Payment Bank licences. 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"
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, like this one below:
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 why we made this toolkit earlier on this blog.