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What is IFSC Code?

Last Update Date : April 30, 2019
Estimated Read Time: 8 min

IFSC codes are required for carrying out financial transactions. In this guide by H&R Block let us see what IFSC code is and why is it necessary.

What is IFSC Code?

Different countries have different alternatives for transferring funds within the country and outside it. NEFT, RTGS and IMPS are options available in India for transferring funds online and in order to perform transfer of fund from one bank to the other one requires a code; which is the IFSC Code. So it is this IFSC Code which aids the online financial transaction.

‘Indian Financial System Code’ makes up as the initials for IFSC Code. This code is allocated by the RBI for every major bank in India i.e. each bank has its unique IFSC code like our DNA (which is unique for each branch of a bank); which enables transferring the funds from each other, electronically. It aids RBI in tracking all transactions.

Features of IFSC Code

  1. It serves as a means of identification of a Bank and its specific Branch where an account holder has its account which is participating in fund transfer.
  2. In India, it is used in transferring of funds online, from one bank to the other.
  3. It enables error free transactions.
  4. It comprises of 11 figure/digits having alphabets and numbers, where the first four figures denote the name of the bank, the fifth figure is zero and the last six figures denote the location of the branch of the bank. An example of IFSC Code is ICIC0001673.

How does the IFSC Code work?

IFSC Code is a unique Code assigned to major branches of the banks in India. It aids in safe and secure financial transactions. It operates by identifying each other from a bank to the other; thereby validating the details provided by a person or remitter who intends to perform an online financial transaction. So if a remitter enters a wrong IFSC Code for a payee, then the financial transaction is denied.

How to Search for the IFSC Code of a Particular Bank’s Branch

IFSC Code can be searched by both ways, online and offline.

Online

  1. You can find it out by searching it on any search engines like Google, Yahoo, Bing etc., by feeding the details in the search tab such as the name of the bank and the name of its branch (location). You will notice IFSC Code appearing in the section of the result.
  2. Check it on the respective website of the bank.
  3. Check it out on the website of RBI.

Offline

  1. Bank Passbook
  2. Bank Cheque book
  3. Branch of the Bank
  4. Bank Statement

How to Transfer Money with IFSC code?

First of all one need to get his bank account activated for electronic fund transfer. The activation process can be done online or one can place a request for the same by visiting their branch.

Once the account gets activated for online banking; one needs to add up the payee, in whose account he wishes to transfer the funds. Adding of the payee in your account is done by feeding up his details such as account number, account name, name of the bank, branch of the bank and the IFSC Code of the bank. On feeding these details your bank will verify the same. Once it gets verified the payee will get added up in your payee list after 30 minutes.

After 30 minutes you can initiate the fund transfer process. You need to click on the tab “Fund Transfer” then you will get an option of the list of payees added up in your account, choose from the list of the payee in whose account you wish to transfer the funds. After selecting the payee, you will notice 3 options available for transferring money online which is i) IMPS ii)NEFT and iii) RTGS.

You can choose any one of it based on your requirement (which is an instant transfer or restricted to the banking hours). Once you have selected the mode of online transfer, feed the desired amount of funds you wish to transfer and then click on “Make Payment”. On clicking it you will see fund transfer is done.

Use of IFSC Code

Use of IFSC code in RTGS

RTGS (Real Time Gross Settlement) is one of the options for transferring funds from one bank to the other through online banking. It is an immediate high-value transaction done on a real-time basis so it happens only during the banking hours.

One needs to have the IFSC Code of the bank in which you intend to transfer the funds. IFSC Code acts as the recognition system in between the banks where they recognise each other before the transaction thus ensuring a secure method of transaction.

One needs to enter the details of the beneficiary such as the name of the beneficiary, account number of the beneficiary, name of the bank, branch of the bank and the IFSC Code of the branch of the bank and then go ahead with the transaction by feeding the amount to be transferred.

Use of IFSC code in IMPS

IMPS (Immediate Payment Service) is one of the options for transferring funds from one bank to the other through online banking without having any restriction of timings. Funds instantly get transferred on a 24×7 basis.

To transfer funds from one account to the other, one needs to add up the beneficiary in his account (to those he wishes to transfer the funds). For adding up a beneficiary in one’s account you require details such as the name of the beneficiary, the account number of the beneficiary, name of the bank, branch of the bank and the IFSC Code of the branch of the bank. On feeding these details you can add up a beneficiary in your account. This process of adding up a beneficiary to your account requires 30 minutes.
After 30 minutes you can transfer funds to the beneficiary account by using the option of NEFT.

Use of IFSC code in NEFT

NEFT (National Electronic Fund Transfer) is one of the options for transferring funds from one bank to the other through online banking, used by firms, corporates and individuals. In order to initiate fund transfer by this method; IFSC Code is necessary and the branch of your bank must be NEFT enabled. It is a real-time transaction done only during the banking hours. Except for a few banks, there is no limit set for the amount to be transferred through NEFT.

To transfer funds from one account to the other, one needs to add up the beneficiary in his account (to those he wishes to transfer the funds). For adding up a beneficiary in one’s account you require details such as the name of the beneficiary, the account number of the beneficiary, name of the bank, branch of the bank and the IFSC Code of the branch of the bank. On feeding these details you can add up a beneficiary in your account. This process of adding up a beneficiary to your account requires 30 minutes.
After 30 minutes you can transfer funds to the beneficiary account by using the option of NEFT.

What is UPI?

UPI (Unified Payments Interface) is a means of instant payment method which enables instant (real-time) transaction of money from one bank account to the other which is UPI enabled on a mobile platform. It is an initiative by National Payments Corporation of India and is under the supervision of RBI.

Without having to feed the sensitive data such as account number, name, IFSC Code, branch of the bank etc.; one can transfer funds, just by using the UPI ID of the concerned person’s account; on a mobile platform. One just needs to create a UPI ID, which is a form of Virtual Payment Address to perform transactions. Banks have launched their UPI Application as different names like ICICI Bank has got Easypay, SBI has it as the name of SBI Pay, Allahabad Bank has Allahabad Bank UPI etc. One can get registered on these applications and start using it.

What is MICR Code?

MICR (Magnetic Ink Character Recognition) is a printing technology which aids in verifying the cheque for clearance in a fast and secure manner. It is a 9 digit numeric Code introduced by the RBI. The first 3 digits represent the city, the next 3 digits represent the bank and the last 3 digits represent the branch of the bank. It is printed at the bottom of the cheque. Information from it can be decoded using a special machine even if something is written on top of it.

People Also Ask

Q. Do all branches of a bank have IFSC Code?

A. No

Q. How can somebody one transfer money with IFSC Code of the Bank?

A. One needs to add up the payee, in whose account he wishes to transfer the funds. Adding of the payee in your account is done by feeding up his details; such as account number, account name, name of the bank, branch of the bank and the IFSC Code of the bank. On feeding these details your bank will verify the same. Once it gets verified the payee will get added up in your payee list after 30 minutes. After 30 minutes you can initiate the fund transfer process. You need to click on the tab “Fund Transfer” then you will get an option of the list of payees added up in your account, choose from the list of the payee in whose account you wish to transfer the funds. After selecting the payee, you will notice 3 options available for transferring money online which is i) IMPS ii)NEFT and iii) RTGS.

You can choose any one of it based on your requirement (which is an instant transfer or restricted to the banking hours). Once you have selected the mode of online transfer, feed the desired amount of funds you wish to transfer and then click on “Make Payment”. On clicking it you will see fund transfer is done.

Q. How to e-Transfer Fund?

A. This can be done by logging in to net banking site by entering your User ID and Password. Now you need to choose whether you want to transfer funds in a different branch of your bank (e.g. SBI Bank to another SBI Bank) or you need to transfer from your bank to a different bank (e.g. ICICI Bank to SBI Bank). In either of the case, you need to feed the details of the payee (such as name, branch of the bank and IFSC Code) in whose account you wish to transfer the funds. Once the payee gets registered you can transfer fund by clicking on “Transfer Funds” and the amount you wish to transfer.

Q. What is the process of registering third-party beneficiary?

A. To register a third party beneficiary you need to follow the steps mentioned below:
(Below is an example for registering a beneficiary in HDFC Bank account)

  1. Log on to your internet banking site by entering your user ID and password
  2. To register third-party beneficiary, you need to now click on “Fund Transfer” and click on “Register Now”. Then click on “I accept Terms & Conditions” and hit on “Confirm” tab.
  3. Then click on the card number reflected over there
  4. As you activating third party transfer for the first time, so I need to feed my ATM pin and date of expiry of my card then hit the “confirm” tab.
  5. Then click on “Register Now”
  6. Then confirm your mobile number
  7. You will now receive an OTP on your mobile number enter the same
  8. Now click on “Proceed to Step 2”
  9. Now a few sets of questions will to which you need to answer and then click on “Proceed to Step 3” and then click on the checkbox and checking the details and hit the “confirm” tab
  10. Now you will see statement stating that you are successfully registered for a third-party facility, you will now be able to transfer funds post 24 hours

Q. What are the different methods of fund transfer with the help of IFSC Code?

A. NEFT (National Electronic Fund Transfer), RTGS (Real Time Gross Settlement) and IMPS (Immediate Payment Service) are three different methods of transferring funds with the help of IFSC Code.

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Chetan Chandak (B.Com, LLB)
Chetan is the Head of Tax Research at H&R Block (India) with an experience of more than a decade in tax advising. He is also a regular contributor for some of the leading news publications in India such as Economic Times, Financial Express and Money Control. Professionally, Chetan is fascinated by international taxation and expat-related tax research.

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