How IFSC Code is Essential to Transfer Money?

Times have changed and so have the ways of transacting. Gone are the days when monetary transactions and fund transfers were done physically with cold hard cash. The virtual world has opened up innovative and time saving ways of carrying out transactions. However, with new ways follow new risks. To eliminate these risks and ensure secure monetary transactions, the Reserve Bank of India employs the system of issuing IFSC Code or Indian Financial System Code.

This is an eleven digit alpha-numeric code used by the Reserve Bank of India to securely enable electronic fund transfers between different banks registered within the NEFT (National Electronic Funds Transfer) network. In addition, this code is also used by electronic payment system applications like RTGS (Real Time Gross Settlement) and CFMS. Each bank branch carries a unique code, issued to it by the Reserve Bank of India, which helps identify the source and destination banks for monetary transactions.

The eleven digit alpha-numeric code can be divided into three parts. The first 4 characters of the code identify the bank e.g. SBI, ICICI, etc. The fifth character is 0. The last 6 characters represent the branch address. For quick use, these codes can not only be found on the cheque books of any participating bank branch but also available online. For instance, TMBL0000044 is the IFSC code of Tamilnad Mercantile Bank, Bangalore city branch located on B.V.K Iyengar Road, which falls under the district of Bangalore, Karnataka.

Each day, millions of transactions take place between different branches of various banks operating within the country, with a high volume of risk involved. This code acts as a safety instrument to not only safeguard but also validate fund transfers. It allows the Reserve Bank of India to channel, oversee and authenticate fund exchanges and transfers

With the IFSC code setup in place for all banks and branches under the NEFT network, the risks involved in virtual monetary transactions have more or less been eliminated. This in turn has made it easier for customers to perform simple banking activities like transferring or depositing money without actually having to visit a bank, making an all round win-win situation for bankers and customers alike!