What is an IFSC Code and What are its Uses?
IFSC Code: Introduction
The Indian Financial System Code, commonly referred to as IFSC code or IFS Code, is a unique 11-character alphanumeric code allotted by RBI to identify a particular branch of a participating bank for electronic funds transfer options such as National Electronic Funds Transfers (NEFT), and Real-Time Gross Settlements (RTGS) in India.
All banks, including public-sector, private-sector, and foreign banks, that participate in the interbank electronic fund transfer have an IFSC code. The IFSC code of a bank is printed on the bank’s cheque leaves. The IFSC code is mandatory for all online domestic transfers in India.
IFSC code contains 11 characters with the first four characters representing the name of the bank, the fifth character is ‘0’ (zero), and the last six characters represent a particular branch of the bank. For instance, SBIN0001114 is an IFSC code where the first four characters ‘SBIN’ tell us that this code belongs to State Bank of India (SBIN), the fifth character is ‘0’, and the last six characters 001114 show the branch code (HAL branch in Bangalore). The fifth character, currently set at ‘0’ is actually reserved for future use.
Customers who want to transfer money online need the IFSC code of the destination bank branch in addition to other details like the account number. No two banks or branches of the same bank can have the same IFSC code. If the customer inputs the incorrect IFSC code for a transaction, the transaction does not take place or the funds get misplaced and need to be retrieved by following bank-specific procedures.
IFSC Code: Uses, Features, and Benefits
Some of the most important uses, features, and benefits of the IFSC code are briefly discussed here:
- It is Unique: IFSC Code is unique and cannot be the same for any two branches of a bank. It can help in identifying the right branch destination for electronic funds transfer in India. In fact, customers cannot carry out online funds transfers without the IFSC code of the destination bank branch.
2. Contains Alphanumeric Values: The IFSC code contains 11 characters with the first four alphabetic characters reserved for the bank name such as SBIN for State Bank of India (SBI). The fifth character has a fixed value ‘0’ for the time being and is reserved for future use. The last six characters are reserved for the branch code of the bank.
3. Easy to Find: It is easy to find the SBI Bank IFSC Code of a bank branch since the information is easily available online. Customers can visit various websites or simply go to the RBI website link:- www.rbi.org.in/Scripts/IFSCMICRDetails.aspx to find the IFSC code of a bank or branch. Customers can also find the code on their bank cheque’s leaves.
4. Allotted by RBI: A lot of people do not know that banks cannot choose the IFSC code on their own, it is allotted by the Reserve Bank of India (RBI). This code can change for various reasons including branch relocation, bank acquisition, etc. but the new number is also allotted only by RBI. RBI assigns an IFSC code to the head office of a bank that in turn assigns these codes to its branches. RBI can cancel and alter the IFSC code at any time.
5. Essential for Electronic Funds Transfer: IFSC Code is essential to carry out any type of electronic funds transfer in India including NEFT, RTGS, IMPS, etc. Being a unique code to identify the right bank branch, it enables confusion-free funds transfer.
It is important to use the right IFSC code to carry out an electronic transfer. If a customer enters the wrong IFSC code, it can lead to repercussions ranging from failed transaction to serious problems such as judicial intervention. Also, it can be stressful to retrieve misplaced funds from a failed transaction if the money is deducted from the sender’s account.
Therefore, it is essential that you cross-check the IFSC code before clicking on the ‘Submit’ button for funds transfer. Of course, you should always do that for all the information entered. If you add a new beneficiary, you must first transfer a small amount and only send a higher amount when the receiver confirms the receipt of the amount from the first transaction.