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IFSC codes explained
An IFSC code is an alphanumeric code (11 characters) that plays a very important role in the financial system of our country. It helps in identifying the bank and the particular branch of that bank. It is used to facilitate online transfers through RTGS or NEFT. The first 4 characters represent the name of the bank and the last 6 characters represent the branch of that bank. The fifth character is 0 and it is reserved for future use. For example, ICIC0000021 is IFSC Code for Gurgaon branch of ICICI Bank.
In this case, the alphabetic code ICIC represents the bank and the numeric code 0000021 represent the Gurgaon branch of the bank. Thus, the IFSC code is very important in processing online fund transfers as it helps in accurately identifying the bank account that is to be credited and the account from which the money is to be debited.
Additional Reading: A Quick Guide To IFSC And MICR Codes
Fast transfer of funds is now possible because of this alphanumeric code as participating banks can be identified electronically, reducing the turnaround time for processing such transfers. Although fund transfers through banks are becoming more and more popular, the use of cheques as a means of payment is still quite common. This is where the MICR code plays an important role. In the case of a cheque, payment amounts are deducted from your bank account once the cheques are processed. The Magnetic Ink Character Recognition Code (MICR Code) helps in the recognition, processing, and clearance of such cheques.