Digital Banking
IFSC: Meaning, importance and full form of IFSC
The Indian Financial System Code, more commonly known as the IFSC, serves as a unique identifier for each branch of a bank. The RBI issues these codes to help in verifying money transfers. Without knowing the IFSC code of bank accounts, transferring funds through NEFT or RTGS is impossible.
Now that you know what is IFSC is and the IFSC full form, let us understand how it works, and why it is important.
What is IFSC?
An IFSC code number is an 11-digit alphanumeric code assigned by the RBI and is unique to every bank branch. This code is required while transferring money to another beneficiary via net banking services like RTGS, NEFT, and IMPS.
This system ensures that funds are transferred to the correct account. Additionally, IFSC helps the RBI keep track of all online transactions.
Importance of the IFSC
Now that you know what is IFSC code, the next step is to understand its importance in the banking industry. Here’s why it’s essential:
- Since the IFSC is specific to banks or branches, it acts as a branch identifier. You can easily identify your branch and fetch its details using the IFSC.
- Even a minor error can result in a wrong transaction and loss of your hard-earned money. Thus, the IFSC ensures that the money transactions are accurate and go only to the intended recipient.
- With increased accuracy via this banking identifier, the use of the IFSC speeds up transactions, making the process easy and convenient. You can complete online transactions within minutes, saving you valuable time.
How does the IFSC work?
You must have noticed that whenever you attempt to send money through internet banking services, the bank portal asks for a few mandatory pieces of information. This includes the account holder’s name, their account number, and the IFSC, among others. If this makes you wonder how IFSC works, this section will answer all such questions.
The IFSC is created with the primary purpose of locating both the bank branches involved in the transaction. The 11-character IFSC number is formatted in a specific way to ease the identification process.
Once you enter the IFSC with other details and submit your request, the bank identifies the receiver’s bank and branch. The beneficiary’s bank will receive the request and verify the code. After verification, the money transfer to the right account is completed.
Features of IFSC
- It is unique to a bank and branch, helping identify the right destination.
- It ensures hassle-free fund transfers online.
- It acts as a safeguard against unauthorised online transactions.
- It helps mitigate banking errors, online banking thefts, and malpractices.
- Online banking transactions cannot go through without entering a valid IFSC.
How to find your branch’s IFSC?
This is one of the most important aspects of understanding the IFSC code meaning. You can find IFSC code of bank or branch easily on any of the following banking tools:
- Cheque Book Leaves: Your chequebook leaves are the easiest source of finding your IFSC. You can find it in the top left corner of your cheque leaf, under the address of your branch.
- RBI Website: You can visit the RBI website, where you can input your bank and branch name and search for its IFSC.
- Bank Website: You can easily check your Axis Bank's branch details by accessing our branch locator tab. You can search for branch details by adding information about your locality.
Ways of transferring money using the IFSC
This code is required to facilitate three major types of online transactions:
- National Electronic Fund Transfer (NEFT): This is a safe and hassle-free online banking tool that requires the beneficiary’s account number, name, bank or branch name, and IFSC. Sometimes, the IFSC is also referred to as the NEFT code.
- Real-Time Gross Settlement (RTGS): This method is widely used to transfer money instantly once the transaction request is initiated. This also requires an IFSC to speed up the processing. People may refer to the IFSC code as an RTGS code while making RTGS transactions.
- Immediate Payment Service (IMPS): This is also a real-time money transfer method, which is used to transfer money instantly. It is available 24/7 and requires an IFSC to process the transaction.
Key differences between IFSC, MICR and SWIFT Codes
IFSC, MICR, and SWIFT codes can be considered bank location codes or bank routing codes to ensure a secure transaction process, but they differ in certain aspects.
| IFSC Code | MICR Code | SWIFT Code |
|---|---|---|
| It is an 11-digit alphanumeric code. | It is a 9-digit code. | It is an 8 or 11-digit code. |
| It is allocated by the RBI to identify banks and branches accurately. | It is used to process cheques electronically using magnetic ink to avoid errors. | It is used to complete safe international transactions. |
| Full form of IFSC: Indian Financial System Code | Full form of MICR: Magnetic Ink Character Recognition | Full form of SWIFT: Society for Worldwide Interbank Financial Telecommunications |
Also Read: Significance of UTR number in financial transactions
When will I need my IFSC?
You’ll need your IFSC in various banking situations, such as making online money transfers via NEFT, RTGS, or IMPS. It is also required when receiving funds from others, especially if the transfer is happening between different banks.
Your IFSC is crucial when setting up automatic payments or when you're filling out bank forms for tasks like opening a new account, applying for a loan, or linking your bank account to various financial services. This unique code ensures that your funds are accurately routed to the correct branch.
FAQs
What is an example of the IFSC?
The IFSC example for Axis Bank, Dadar-Mumbai Branch is UTIB0000124.
How is the IFSC written?
The first 4 characters of the code represent the bank’s name, the fifth character is always 0, and the last 6 characters are the code of the branch. Since Axis Bank was originally called UTI Bank, the first four characters of Axis Bank’s IFSC are UTIB.
Are there other types of IFSCs in India?
No, the IFSC is unique to all banks and is allocated by the RBI.
As we move forward in the transition of Citi's consumer business in India to Axis Bank, you may be aware of the change in the IFSC of your account. While your Citibank IFSC will also be valid until migration (expected to be completed by the middle of 2024), we urge you to start using your new Axis Bank IFSC now. Read on to know more about the importance of IFSC and why you need to start using the new Axis Bank IFSC.
For further information regarding payments linked to your Citi credit card or account, click here.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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