What is IFSC Code?
Have you ever wondered about all the codes that you give out while making bank transaction online? Financial transactions require the right bank codes that can make the transactions easier and seamless across India. The Reserve Bank of India also known as the RBI is the centralized banking authority overlooking the functioning of various banks across India and also controlling the fund transfer between Indian banks. While most of the transactions earlier were offline, but with the advent of internet things have become easier and most users prefer to transfer funds online for personal and business purposes. IFSC code also known as The Indian Financial System Code is an alpha-numeric code that identifies the bank branch that participates in RTGS and NEFT electronic fund settlement.
An IFSC code is an 11-character code that consists of first four alphabetic characters that generally represents the bank name. The fifth character is generally zero and the last six characters are numbers representing the branch of the bank. Currently, it has become mandatory across India to enter the IFSC code when you are making online fund transfer.
Importance of IFSC Code
The Reserve Bank of India certainly wants to keep a check and monitor the transactions made online in the country and IFSC code is a great tool to monitor the funds settlement done online. With the help of IFSC code, RBI can find out information about the origination and destination bank branches and that makes it convenient for the RBI to ensure the money is being transferred correctly.
On the other hand, it also allows the banks to ensure that the money is being transferred to the right destination bank account. Since IFSC code is unique for each bank, it can eliminate the errors that can occur during the transaction. Using IFSC code will ensure the bank that they are not making any errors in terms of the bank branch.
As most consumers today make use of the internet, there are millions of business owners and regular banking consumers that use their desktops and mobile devices to make an electronic fund transfer. This has increased the number of online fund transfer transactions across the country. Without IFSC code, banks would run into problems of handling so many queries and that would lead to poor financial management. With IFSC code, online banking customers can feel safe and they can make their online fund transfer and ensure that the funds are transferred safely. When the customers make use of the right IFSC codes, the banking transaction happens without error.
RBI also makes changes to IFSC codes from time to time to ensure that all banks have unique IFSC codes and that there are no two banks that have the same code. Having a unique code for each bank branch makes the entire RTGS and NEFT transaction simpler and faster. To make it convenient for the users, banks have decided to print IFSC code to bank cheque book leaves, and at various places in the bank and online sites.
IFSC code works like a unique identification code for each bank branch ensuring that Reserve Bank of India can monitor the movement of cash flow as and when they require. At the same time, banks can also make their jobs easier as they understand which bank branch the money has to be transferred. Thirdly, customers that make use of mobile and online devices can make online fund transfer in few minutes without any errors because they need to input the IFSC code of the bank branch they want to deliver the funds. Hence, there is no spelling error which can further complicate the fund transfer process.