IFSC – The Armor of Online Fund Transfer

Banking Goes Online

Years of innovation have finally paid off as banking worldwide has finally reached a point when cashless transactions have become the norm. With inventions like e-wallets, credit cards, mobile banking, net banking, electronic fund transfer and more, carrying cash has become passé. Cashless banking has created nothing but an all-round win-win situation for everyone involved. We save on time, otherwise spent on making trips to the bank; the risk factor has been drastically reduced as money is not changing hands physically but electronically and not to forget, the trees all around are thanking us for going online as well.   

IFSC

From the spectrum of banking services which have gone online, fund transfer is probably one of the most crucial banking services which people stand to benefit from. In India, where financial crimes are rampant, online fund transfer may be considered as a beacon of hope to bring down the risk factor surrounding monetary transactions. The credit for revolutionizing the process of online fund transfer in India lies with the Reserve Bank of India, which has introduced the IFSC (Indian Financial System Code) to the NEFT (National Electronic fund Transfer) and the RTGS (Real Time Gross Settlement) systems of electronic fund transfer.  

About IFSC

The IFSC (Indian Financial System Code) is an 11-digit alphanumeric code which is issued by the RBI to all banks who are under the NEFT (National Electronic Fund Transfer) and RTGS (Real Time Gross Settlement) network. Serving a crucial role in the electronic payment system, the IFSC code comprises of 3 parts. First four characters stand for the bank name, the fifth character is always zero and the remaining 6 characters represent the branch address. For instance, let us take the example of the Yes Bank Dwarka branch IFSC code which is YESB0000263. In this 11-digit code, the first 4 characters - ‘YESB’ – stand for Yes Bank, the fifth character is 0 and the remaining 6 characters ‘000263’ give the location of the mentioned Yes Bank branch which is located in Dwarka, New Delhi.

Why IFSC is Crucial to Indian Banking

In the Indian banking system, the IFSC code holds a unique position for several reasons.

• Helps Identify Source and Destination Banks

    Each bank participating in the NEFT and RTGS network is issued a unique IFSC code which

    helps identify source and destination banks in the event of a fund transfer.  

• Saves Time

    With the help if the IFSC code, money can be transferred from one bank branch to the  

    other, all the way across states in a matter of a few hours.

• Regulate Monetary Transactions

    Since the IFSC code identifies source and destination banks in an NEFT / RTGS fund

    transfer, it is easier to regulate the authenticity of transactions in case a discrepancy

    arises.

• Eco-friendly Method Of Transferring Funds

The entire process of applying for an NEFT/RTGS transfer to receiving the money can now be conveniently be done online. This in turn has helped save copious amounts of paper which would conventionally be used in the process.