Indian Financial System Code (or more commonly known as IFSC code) is an 11-digit alpha-numeric code used to uniquely identify bank branches within the National Electronic Funds Transfer (NEFT) network by the central bank.
What is IFSC?
IFSC code is used by the 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. Every bank branch will have a unique code and no two branches (even of the same bank) will ever be the same.
An IFSC code recognizes and differentiates every branch of the bank involved in India’s two significant methods of settlement and payment.
- RTGS (Real-Time Gross Settlement) – The beneficiary bank provides direct instructions for the transfer. The payment is gross, so each transaction is performed individually. These payments are final, and can not be withdrawn.
- NEFT (National Electronic Fund Transfer System) – NEFT is a centralized nationwide payment method owned and controlled by the Reserve Bank of India ( RBI). It easily transfers money between banks across India. A bank branch should be NEFT enabled to permit a customer to transfer the funds to another party.
The main difference between NEFT and RTGS is that, unlike RTGS, the movement of funds in NEFT occurs in batches. Hourly intervals are fixed for this reason, and the settlement is assigned to one such time slot.
IFSC code of a specific branch
To obtain any bank’s IFSC code, the person must provide the following details;
- The name of the bank
- Name of the state where the bank is located
- Name of district
- Name or address of the branch
IFSC code format
- The IFSC code has 11 characters
- The first four letters inform about the bank‘s name and the last seven letters indicate the number of the branch
- The IFSC code is SBIN0000738 in this SBIN describes the bank name, and the branch number is denoted by 0000738. For State Bank of India, the first four letters will be ‘SBIN’, and the last 6 digits will represent a specific branch code. For instance, the IFSC code of the SBI branch at Azadpur, Delhi is SBIN0001707′, where 001707′ is the branch code
- The IFSC Code is used to transfer money from one branch of the bank to another branch via RTGS or NEFT, in other phrases, to make a cash transfer via an online and digital method
What is IFSC NEFT transfer?
National Electronic Funds Transfer (NEFT) is a nation-wide system that facilitates individuals, firms, and corporates to electronically transfer funds from any bank branch to any individual, firm, or corporate having an account with any other bank branch in the country. NEFT transfers are also referred to as e-cheques as the funds are not transferred in real-time and the funds are settled in batches.
What is IFSC RTGS transfer?
‘RTGS’ stands for Real-Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). You need the IFSC Code to identify the Branch for which you will want to transfer funds using RTGS. Note all branches don’t have IFSC Codes.
What is IFSC IMPS transfer?
‘IMPS’ is an Immediate Payment Service and it is commonly known as Interbank Mobile Payment Service. IMPS uses IFSC codes to offer many fund transfer services instantly in a round-the-clock environment. National Payments Corporation of India (NPCI), the regulator of retail payments in India, provides this facility.
Importance of IFSC code
- RBI provides the IFSC Code for the identification and classification of banks and their branches that provide RTGS, IMPS, and NEFT facilities.
- IFSC code allows RBI to verify and evaluate financial transactions without disruption and error.
- RBI can administer and handle all online banking transactions via IFSC code, explicitly RTGS, NEFT, and IMPS.