Whenever you send money to someone online or make payment through cheque, two important codes work behind the banking system – one is IFSC and the other is MICR. The role of both is different, but they are very important for secure, accurate and fast transactions. Having correct information about them reduces the chances of mistakes in transactions and makes the banking process easier. Let us understand what IFSC and MICR codes are, how they work and what is their importance in everyday banking.
What is IFSC code?
IFSC i.e. Indian Financial System Code is an 11 digit alphanumeric code, which gives a unique identity to every bank branch in the country. This code is also printed on your checkbook. Its structure is as follows:
- First four characters: represent the name of the bank.
- Fifth character: There is always ‘0’ (zero), which acts as a separator.
- Last six characters: Identify the relevant bank branch.
IFSC code is mainly used in electronic fund transfer systems like National Electronic Funds Transfer i.e. NEFT, Real Time Gross Settlement i.e. RTGS and Immediate Payment Service i.e. IMPS. This code ensures that your money reaches the right bank and the right branch without any errors. Reserve Bank of India provides IFSC codes of all banks on its official website, so that customers can get correct information.
What is MICR code?
MICR i.e. Magnetic Ink Character Recognition is a 9 digit numeric code, which is mainly used in the check clearing process. This code is printed at the bottom of the check with magnetic ink, which can be easily read by the machine. Its structure is as follows:
- First three digits: Represent the PIN code of the city.
- The middle three digits: Identify the respective bank.
- Last three digits: indicate the branch code.
With the help of MICR technology, check processing is fast, secure and error free. This code is also recognized internationally, making banking operations more efficient.
What is the difference between IFSC and MICR?
IFSC code is used for online fund transfer, while MICR code is required for check clearing. IFSC is an 11 digit alphanumeric code, while MICR is a 9 digit numeric code. IFSC is an important part of digital banking, while MICR plays an important role in the traditional check system.
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