Do you have any clue about IFS Code? That’s correct! Full form of IFSC is “Indian Financial System Code” (IFS code). But, what is it? Why is it so important? Let’s explore.
What is IFS Code?
IFS Code is an 11-digit Alphanumeric Code. This code helps in the electronic funds transfer in India.
The Reserve Bank of India is the central banking authority in India and controls all the associated banks and banking affairs throughout India. The RBI is the issuer of IFS Codes to all the member banks. The RBI itself lists and records the IFSC of all the participating banks. RBI instructs all the associated banks, to publish the IFS Code of the particular bank branch on the Cheque Leaves which bank issues to customers for the convenience of customers.
Structure of IFSC:
This is the format of an IFS Code:
Importance of IFSC:
An IFS code is important for the three main Payment and Settlement Systems in India: Real Time Gross Settlement (RTGS), National Electronic Fund Transfer (NEFT) and Immediate Payment System (IMPS). It uniquely identifies each bank branch which is participating in these payment & settlement systems.
Bank IFS Code is also important for NEFT, RTGS and IMPS systems. In these systems IFS Code route the messages to the destination banks or branches. The IFSC system is only for domestic transactions. Therefore, every bank branch in India will have an IFS Code that’s a unique identifier for the bank branch. Whether the bank is a public-sector bank, private sector bank or a foreign bank.
In case of overseas remittance systems, the international standard continues to be the SWIFT code, which is often not branch specific. Once you know your IFS code for your bank account, you just need to mention the same along with your account number and correct name on the Account. And, this will let you receive funds from anybody.
Recommended Read: How to transfer money within India from the comfort of your home?
Benefits & Uses of IFS Codes:
Now that you know the basics of IFSC code, here are some of the major benefits and uses of the same.
1-Facilitate Quick Transaction:
In this era of internet, we no longer have to stand amidst people in long, never-ending queues in the bank, especially, if you need to transfer a small amount. IFS codes are mainly used for bank transfers by adding the beneficiary’s account number for quick transfer of funds. For example: If you have a bank account in SBI and you need to transfer funds through NEFT, IMPS or RTGS, you will need to add Beneficiary in SBI Net Banking account. This is where you will be asked for the IFSC Code of the Beneficiary. When it comes to IFSC code, you can get the job done within minutes without having to go out of your comfort zone.
2-Reduction in Fraud:
With the code being unique to each bank along with their respective branches, there is a minimal possibility for any kind of fraud or theft. This is why one can find IFSC Code jotted down on the cheques too. The transaction hence becomes secure with no vulnerability whatsoever.
3-Reduction in Workload:
Using the IFSC doesn’t just bring down the load for the account holder. It is also beneficial for the bank given the fact that there is less amount of paperwork to do when the maximum fraction of transactions are being carried out on the internet platform within minutes. The database can be updated and modified as per requirement without having to search through a load of papers while looking through each and every one of them even for a simple transaction.
4-SMS for Transaction:
For the entire credited as well as debited amount, the bank sends you an SMS on behalf of banks from both receiver as well as giver of the said amount. This is possible because of the IFS code that helps the bank identify the branch being used for the purpose of the transaction. The identification of the origin, as well as the destination bank, helps with the proper and timely transfer of the amount without any kind of mistake in the transaction.