All About IFSC Code and MICR Code in Indian Banking System

What is Indian Financial System Code?

The short form is the IFSC code. RBI issues this 11-digit alphanumeric code to all the banks in India. These set of characters allows each bank’s branch to streamline the electronic fund's transfer process.

This code is unique to every bank and no two branches of the same bank can have similar IFSCS codes.

To transfer funds between two banks it is mandatory to give a valid IFSC code of the payee for successful online transfer of funds. The IFSC code of a bank’s particular branch can be easily found on the bank’s cheque leaf, account passbook, or on the RBI website. Any kind of fund transfer through NEFT, RTGS, and IMPS requires this 11-digit IFSC code.

What is the Structure of IFSC Code?

So, the first 4 characters of the 11-digit code disclose the bank name. The 5th digit is a zero in case there is an expansion of the bank branch (as per the RBI guidelines). The last 6 digits represent the bank location

To cite an example for bank of India Ifsc code - BKID0000002

  • BKID - Bank Branch (Bank of India)
  • 0 - Zero
  • 000002 - Branch Code (Bank Of India Andheri West)

How Does IFSC Code Work?

The Reserve Bank of India monitors all the banking transactions in an immaculate manner using the IFSC code. Using IFS code RBI tracks manages and executes all the electronic transactions.  To transfer funds the bank account holder needs IFSC codes of the beneficiary’s bank or payee. RBI keeps a track of millions of digital transactions that take place on a daily basis. It works as a common thread amongst different electronic fund transfer options. With IFSC code the money is channelized to the correct destination.

Fund Transfer Charges Using IFSC

The bank charges money for transferring funds from one bank branch to another. This is also charged on transactions above a certain amount.

Transaction Charges





Up to Rs. 10,000

 Rs. 2.50 ( in other bank branch)

 Mininmum2  Lakhs

 Rs. 5

Rs 10,000 to Rs. 2 Lakh

 Rs. 15

 Rs. 26

 Rs. 10

Above 2 Lakh

 Rs 25

 Rs. 51

 Rs. 15

  • NEFT: 8 A.M –to 7 P.M (Weekdays)
  • IMPS: Round-the-clock
  • RTGS: 9 AM to 4:30 P.M (Weekdays)

 Methods of Online Fund Transfer Using the IFSC Code

  • NEFT – For NEFT transfers, the sender needs to provide the name of the recipient, IFSC code of the beneficiary bank branch, account number and the account type. NEFT funds are settled in a batch-wise
  • RTGS – RTGS is used for transactions for a minimum of Rs.2 lakh and above. The transaction is done instantly. The details that are required include the name of the beneficiary, account number, IFSC code of the payee’s bank branch, and the amount to be transferred.
  • IMPS – The money is transferred on a real-time basis using the IFSC code.

How to Transfer Money with IFSC code?

Using IFSC code the money is transferred online in a quick and seamless manner. Let’s see how IFSC Code is used in online transactions. Assume Central Bank of India IFSC Code, Gurgaon, New Sohna Road is CBIN0281026.

  1. The first four digits represent the Central Bank of India
  2. The 5th digit is basically 0 (Zero)
  3. The last 6 characters 281026 identify the beneficiaries bank branch

For online fund transfer via NEFT, RTGS or IMPS, the sender needs to enter the bank name of the payee, the bank branch, payee’s account number, and IFSC code. The beneficiary needs to be added before the fund transfer. Once it is added, NEFT can be done on a regular basis. Once all the details are provided the amount is transferred into the payee’s bank account in a secured manner.

Money Transfer through SMS:

These days it is easier to transfer money through SMS using IFS code. Here is a quick rundown of how it’s done:

  1. To transfer funds through the SMS, you need to link your bank account to your mobile number and registering your mobile number for mobile banking services.
  2. To register your mobile, you need to submit an application requesting for mobile banking services. You will receive a unique 7 digit number also known as mPin and MMID
  3. After registering for mobile services with your particular bank, simply create an SMS and type IMPS along with beneficiary details like bank, branch, payee name, payee account number, amount to be transferred and the IFSC code of the beneficiary’s bank
  4. Once the transaction is confirmed and you send an SMS, you will get a confirmation message where you need to enter your mPin
  5. Select ok and the money will be fund will be transferred to the beneficiary’s account

Understanding MICR Code

Magnetic Ink Character Recognition or MICR is a character recognition technology that helps in faster processing of a bank cheque.

A unique MICR code is given to a particular bank branch. This code helps the Reserve Bank of India to ascertain the bank branch and expedite the cheque clearing process.

The magnetic ink bars that are printed on the bottom of a bank cheque represent the same.

Components of MICR Code

It is a 9-digit numeric code, which is a unique identification code of a bank and the bank branch involved in the ECS or Electronic Clearing System. 

The initial 3 digits represent the city of the bank. The middle code identified the bank the and last 3 digits denote the branch code.

The MICR code is printed at the bottom of a cheque leaf, next to the cheque number.

Usually, it is printed on the first page of a bank passbook. The MICR code is required while filing up different financial transaction forms like SIP forms, forms for transfer of funds or investment forms, etc. 

How are MICR Code and IFSC Code Different from Each Other?

  • Using IFS code the funds can be transferred from one bank account to another across India. On the other hand, MICR code makes the processing of a cheque faster.
  • MICR has 9digits, where IFS code is an 11 digit unique code