1. What is the IFSC code?

The IFSC code is a unique identifier that is assigned to all major bank branches in India. IFSC is an acronym for Indian Financial System Code. The IFSC code is made up of 11 characters. An example of an IFSC code is SBIN0RRAPGB.

  • First four characters: The first four characters are used to identify the bank. In the example above 'SBIN' is an identifier for the State Bank of India.
  • Fifth character: The fifth character is always zero and is reserved for future use.
  • Last six characters: The last 6 characters are used to identify the branch. 'RRAPGB' is the 'ANDHRA PRADESH GRAMEEN VIKAS BANK' of the State Bank of India.

2. What is the MICR code?

The MICR code is an older code that was introduced by the Reserve Bank of India (RBI) in the early 1980's to simplify fund transfer via checks or Demand Drafts (DD). MICR stands for Magnetic Ink Character Recognition and is a 9 digit numeric code that can be found on all checks. The MICR code is printed on the bottom of the check or DD using a special magnetic ink. It is possible to extract the information in the MICR code using a special machine even if there is some writing or stamping on top of the MICR code.

  • First three digits: The first three digits of a MICR code determines the city in which the bank account is held.
  • Next three digits: The next three digits of the MICR code is used to determine the bank.
  • Last three digits: The last three digits of the MICR code is used to identify the bank branch.

3. Why is the IFSC code needed?

The IFSC code is used to perform electronic fund transfers across various banks in India. Most major bank branches involved in bank-to-bank electronic payments have a unique IFSC number. The IFSC code is used by banks to identify the source and target bank branches for fund transfer. It is also used to exchange messages and information across the banks.

4. How can I find the IFSC code for a particular bank account?

The IFSC code can be found from the sources below if you know the bank branch name and location.
  • Check leaf: The apex bank of India, Reserve Bank of India (RBI), has advised all banks to print the IFSC code on the check leaf. You can find the IFSC code printed on the check book and check leaves.
  • Contact bank branch: If you are unable to find the IFSC code on the check leaf, you can contact the bank branch directly and ask them for the IFSC code.
  • Search for the IFSC code: If you know the bank name and branch, you can search for the IFSC code at www.bank-codes.com/ifsc-code/.
  • RBI website: The Reserve Bank of India website has a list of all bank branches that have an IFSC code.

5. How is the MICR code used?

The MICR code is used extensively in a manual fund transfer process. Once a check is issued, it must be deposited by the recipient in his or her bank. The recipient's bank processes the check and sends a request for transfer of funds to the source bank. The check is also sent along with the fund transfer request to the source bank. After the source bank validates the information received, the fund is credited to the recipient's bank.

The purpose of the MICR code is to automate the check clearance process which results in a faster fund transfer. Since the MICR code can be read by a special check reading machine, the check clearance step is fast and not subject to human errors. It also serves as a protection against fraud. For instance, a check or DD that does not have a machine readable code can be identified as a fake check.

6. What is the advantage of an electronic fund transfer over the manual fund transfer?

The process of manual fund transfer takes time as there are multiple manual steps involved. The Reserve Bank of India (RBI) is the apex bank in India and has stipulated the maximum time for a fund transfer by check. All local checks must be cleared within 3 working days. Outstation checks can take a maximum of 7,10 or 14 days depending on the location of the bank. This means that the time to en-cash an outstation check in a remote location can be a maximum of 14 days. Also, there is a possibility that the check can be lost in transit from one bank to another, in which case the check must be re-issued. Further, some banks charge a service fee for outstation checks to cover incidental expenses to manually transfer the check.

7. What are the forms of electronic fund transfer?

There are three major forms of electronic fund transfer – the NEFT (National Electronic Funds Transfer), the RTGS (Real Time Gross Settlement) and IMPS (IMmediate Payment Service) transactions.

  • NEFT: The NEFT is similar to an electronic check. The bank processes NEFT requests in batches, usually once an hour. After a request for a NEFT transaction is placed, you will have to wait for the next NEFT batch in order to process the transfer. If the NEFT request is placed after the cut-off time for the last batch in a day, the execution happens only on the subsequent day.
  • RTGS: The RTGS is intended for high value transfers where the fund transfer is required immediately. Once a RTGS request is placed, the funds are instantaneously received by the recipients bank. The RBI has advised all banks to credit the recipient's account within 30 minutes. Since the RTGS transaction happens in real time, it is possible to make these transactions only during bank working hours. Some banks may have a specific time for RTGS transactions.
  • IMPS: The IMPS is a new electronic fund transfer option used for transferring funds 24-by-7 on all days, including Sundays and bank holidays.

The NEFT and RTGS transactions are governed by the RBI (Reserve Bank of India) while the IMPS transactions are governed by the NPCI (National Payments Corporation of India).

8. How can I initiate an electronic fund transfer?

The popular and convenient way to initiate an electronic fund transfer is via an online bank account. Some banks require a written authorization from the user to enable electronic fund transfer online.

Other means are available to initiate an electronic fund transfer. Most major banks have branches that are NEFT and RTGS enabled. It is possible to place a request at these banks for electronic fund transfer. You can make a fund transfer at these branches even if you do not have a bank account with the branch. Some banks have enabled the option of making a NEFT transaction at their ATM machines.

9. How can I use the IFSC code to make a payment using online banking?

An online account that is enabled for electronic fund transfer, sometimes called third party transfers, is necessary to perform a NEFT, RTGS or IMPS transaction to any other bank account in India. The first step is to add a 'payee' to whom you would like to transfer funds. The process of payee addition is easy if you have the IFSC code. The steps needed to add a payee into an online bank account is shown below. The actual steps might vary slightly from bank to bank.

The steps to add a payee are:

  • Click on 'Transfer Funds' to initiate the fund transfer process.
  • Click on “To Other Bank Accounts” to initiate a NEFT, RTGS or IMPS transaction.
  • Click on “Add New Payee” to add a new recipient.

The next step is to enter the details of the recipient. Enter the name of the recipient as in the bank records followed by the IFSC code of the recipient's bank branch.

Once you click on “Get Bank Details”, the recipient's bank branch details are automatically captured on the screen. Enter the bank account type, the account number and click on “Submit” to add the payee.

Once you place a request to add a payee, the bank will verify the details on your registered e-mail and phone with a OTP (One Time Password). You will have to wait some time (usually a day) after adding a payee before you can initiate a fund transfer to the recipient. There is also a limit on the maximum amount that can be transferred for a few days. These restrictions are set by the banks as a security feature and the exact details vary from bank to bank.

The steps to make a fund transfer after payee addition are:

  • Click on 'Transfer Funds' to initiate the fund transfer process.
  • Click on “To Other Bank Accounts” to initiate a NEFT, RTGS or IMPS transaction.
  • From the registered list of payees, click on “Make Payment” to make an electronic payment.

After clicking on “Make payment Now”, the details of the recipient's name and bank account appear on the screen. Select the form of fund transfer that you want to use (NEFT is used in this example). Enter the account from which you want to transfer funds and the amount to be transferred. Click on 'Continue' to continue the fund transfer process.

The final steps after clicking 'Continue' are confirmation screens. You can click to confirm the fund transfer.