Difference between IFSC and MICR code

micr definition

IFSC code is used by electronic payment system applications such as real-time gross settlement (RTGS), NEFT and Centralised Funds Management System (CFMS). This code is mandatory for fund transfers from one bank account to another.

RTGS is one of the main payment and settlement systems in India. To make a payment using RTGS, one requires details like name of the account holder, account number and the IFSC code of the bank. Money can be transferred from one bank account to another safely using RTGS. IFSC code is often referred to as RTGS code or NEFT code for the same reason.

As it appears on the front of a check check, the routing number represents the bank that holds the account from which funds are to be drawn. Wire transfers and direct deposits often rely on routing numbers. The IFSC code comprises eleven characters and is used to identify the bank and its branch. it is one of two main payment and settlement systems in India.

UPI operates over IMPS infrastructure and allows instant transfer of money between any two bank accounts. In case you are registering with the service for the first time, you’ll need to create a 4 to 6-digit UPI Pin (Personal Identification Number). You will have to enter the UPI PIN to perform all UPI transactions. UPI payment method allows fund transfer offline and online. Moreover, irrespective of the bank’s working hours, an individual can instantly transfer funds anytime.

This is a unique code provided to each bank branch for easy identification of individual bank branches in India. The banks using electronic payment system, uses this unique code to identify each bank branch in India to make all type of electronic money transactions without any confusion.

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Producers of MICR-encoded documents must meet ANSI document preparation standards. IFSC is a 11 digit code The first four characters of this alphanumeric code disclose the name of the bank. The fifth character has been kept zero to accommodate expansion of branches. Last 6 characters in the code tell the exact location of the bank.

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IFSC Code also can be used at the time of purchasing mutual funds or insurance through NetBanking. As the National Clearing Cell of Reserve Bank of India monitors all transactions, IFSC Code helps RBI to keep a track of various transactions and execute fund transfer without any hassle. With IFSC Code, online money transfer has become easier and hassle-free. RBI has assigned these codes to the bank branches to perform NEFT, RTGS and IMPS fund transfer in a smooth way. To know how IFSC Code works while transferring money, let’s take an example here.

So, this is largely to with the system of cheques, while IFSC Code is largely to with the NEFT and RTGS system and the same is mentioned on the cheque leaves as well for the sake of convenience. So, it must be noted that both are remarkably difference from each other. The advent of the electronic form of payment has paved the way for greater and greater emphasis on the use of the IFSC Code. Today, you cannot remit amounts to a beneficiary unless you have the IFSC Code, which is of great signficance than ever before. So, make sure that you have it before you send and receive money.

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IFSC (Indian Financial System Code) consists of eleven characters and is used to identify the bank and its branch. While the branch code is a part of the IFSC code, it is not the same. Let’s know how IFSC Code works during a transaction. When a fund transfer is initiated, one has to provide the bank account number and the IFSC code of the payee.

Electronic funds transfer in India is facilitated by an alpha-numeric code called the Indian Financial System Code (IFS Code or IFSC). One of the benefits of the magnetic ink character recognition line is its ability to quickly facilitate the use of routing numbers.

  • IFSC is an acronym for Indian Financial System Code.
  • It is used to transfer funds online for NEFT, IMPS and RTGS transactions.

The procedure to use RTGS service is same as NEFT. You simply need to make sure that your, as well as the beneficiary’s, bank accounts are RTGS-enabled and you have the IFSC code of his/her bank branch. Afterwards, you need to add the beneficiary to your account to whom you want to transfer the money. To do this, you will need the beneficiary’s name, her/his bank account number and the IFSC (Indian Financial System Code) of her/his bank branch. IFSC can be either found on the bank statement or on the cheque leaf.

What does MICR mean?

MICR (magnetic ink character recognition) is a technology used to verify the legitimacy or originality of paper documents, especially checks.

The MICR number allows computers to rapidly internalize a check number, routing number, account number, and other numbers or information from printed documents, such as a personal check. The MICR number, which is sometimes confused with just the account number, is printed with magnetic ink or toner on a check, usually in one of two major MICR fonts. The magnetic ink allows the computer to read the characters on a check even if they have been covered with signatures, cancellation marks, or other marks.

Every bank branch will have a unique code and no two branches (even of the same bank) will ever be the same. An RBI regulated entity, National Payment Corporation of India (NPCI), has developed an instant payment system known as the Unified Payment Interface (UPI).

To transfer funds, one needs to know the IFSC code, so that the beneficiary gets the funds directly in his account. There is no physical dispatch of cheques between the clearing house and the banks is involved. This unique code system is used for instant transfer of money using internet.

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ACH is an electronic money transfer system that lets individuals receive or send payments via the Federal ACH network of banks in the United States. Magnetic Ink Character Recognition (MICR), a technology invented in the 1950s has allowed financial institutions to streamline their check processing. The characters are printed with special MICR Fonts and are known as MICR Characters, which must be printed with MICR Toner or MICR Ink. It is the combination of Toner and Fonts that create the machine readable MICR line. MICR Toner or MICR Ink are the elements which add the magnetic readability to each character, allowing for high-speed check clearing.

The IFSC code of HDFC Saket, New Delhi branch is HDFC . One can find the IFSC code either in his/her bank passbook or on the chequebook.

Both the banks when combined has customer base of around 120 million, over 9,500 branches, 85,000 customers, and more than 13,400 ATMs. The current account number consists of 11 digits, IFS Code consists of 9 digits, together with other identifications of the bank and the branch shall be the same until notified further. Cheque deposits and cash deposits are to be made in the branches of the parent banks. No change in the digital banking channels is implemented.

MICR code contains the details of the cheque such as serial number, the 9 digit number. The first three digits represent the city, next three represent the bank and the last three digits indicates the branch. The code was introduced by RBI to make NEFT (National Electronic Fund Transfer) quick and efficient. IFSC code is developed to initiate electronic money transfer between banks within India, MICR is a Magnetic Ink Recognition technology for making cheque processing faster and simpler.

The convenience of transferring funds online has certainly made our lives much easier. Almost, every other bank provides multiple payment options such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), etc. Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a project of the Reserve Bank of India (RBI), commenced in 2010, for faster clearing of cheques. So, the difference essentially is that IFSC Code is used when remitting money through NEFT and RTGS. On the other hand MICR code is used only on cheque leaves.

The IFSC code is even printed on the cheque books issued by all banks and one can know the IFSC code by looking at the cheque slip. The sample cheque which uses MICR technology is depicted in the figure-1. The information on the cheque is processed using MICR reader which updates accounts and performs various other processes. The unification of Vijaya Bank and Dena Bank made Bank of Baroda (BOB) the second largest public sector banks in India when we talk about customer base and network.

This code is used by electronic payment system applications such as RTGS ( Real Time Gross Settlement), NEFT (National Electronic Fund Transfer), CFMS (Centralised Funds Management Systems). Yes it ‘ll change but if you are using the same IFSC even (The old one) it ‘ll not make any difference for customer transactions on CBS platform. Getting the bank’s name from first four digits and the account number, the funds ‘ll be parked in the correct account but this ‘ll work for customer remittances only.

For Banking transactions it ‘ll make a difference as the funds ‘ll be parked in the General Ledger account of a difference branch of the beneficiary bank. To find your ACH routing number, first check your checkbook. It may be the nine-digit number to the left of your account number.

IFSC is an acronym for Indian Financial System Code. IFSC code is a unique eleven-digit number which is a combination of alphabets and numerals. It is used to transfer funds online for NEFT, IMPS and RTGS transactions. Usually, the IFSC code can be found on the cheque-book provided by the bank. It can also be found on the front page of the accountholder’s passbook.

The IFSC code of each bank branch is assigned by the Reserve Bank of India. The accountholders can easily check the IFSC code of their bank/branch on the Reserve Bank of India’s website. Internet banking transactions for transferring funds, using NEFT, IMPS and RTGS, can’t be initiated without a valid Indian Financial System Code. IFSC (Indian Financial System Code) is a 11 digit alpha numeric code issued by the RBI (Reserve Bank Of India).