IFSC & MICR Code: Codes that Govern the Indian Banking Process

The Indian banking sector is a huge network of thousands of banks all over the country.  Transactions take place at enormous numbers every single day and the amount transferred varies over the geo-political area. Keeping track of the transactions is hence of pivotal importance. To facilitate this process, the Reserve Bank of India has come up with codes that help in faster transfer and easier clearance. A few among them are the IFSC code and MICR code.

What is IFSC code?

IFSC stands for Indian Financial System Code, which is an eleven-digit code that specifies the bank code and branch code for fund transfers. It is located either in the top or the bottom of a cheque leaf. It is a collection of numbers and alphabets that specify a particular bank in India. The format of a typical bank of India IFSC code is

  • First five characters denote the bank code
  • The fifth character is a zero
  • Last six characters denote the branch code

By using IFSC codes, one can effectively track the transfer of money from one bank account to another using NEFT, IMPS, and RTGS  mode. The Reserve Bank of India (RBI) lists the Central Bank of India IFSC codes of all banks that function in India in its official website.

What are RTGS, NEFT, and IMPS Transactions?

  • RTGS - It is the acronym of Real-time Gross Settlement. It is a method of transaction wherein the transfer of money or tradable financial asset takes place instantly without any delay. It is a one-on-one transfer of money between two banks anywhere in India that doesn’t stress on the time window. When one person transfers money through RTGS transaction, the money is credited in the remitter’s account.
  • NEFT - It stands for National Electronic Funds Transfers. The difference between RTGS and NEFT is that NEFT transactions have a certain time window. One cannot transfer the money instantaneously from one account to another. It can be done between any two banks in India that has NEFT accessibility. The transfer is not real-time. It means that the transfer can only take place within a limited time-space. The transfer is carried out in a thirty-minute window with 23 settlements from 8.00 am to 7.00 pm. The transfer is also restricted to the days in which the payment is made. NEFT is available on the weekdays and the first, third, and fifth Saturday of a month. It is to be noted that both RTGS and NEFT payments are not made on Sundays.
  • IMPS -  Stands for Immediate Payment Service, IMPS is the fastest means of money transfer. The transfer is made within a matter of 20 seconds or less. The difference between NEFT, RTGS, and IMPS is that transfer can be made through mobile phones within a short span and it is available round-the-clock. There are no time restrictions for transactions, there are no specified days during which the payments must be made. The bottom line is that it is hassle-free and perfect for today’s fast-paced world.

Transactions through NEFT, RTGS, IMPS: Thinks to Remember


  • Create a username and password with your bank that is NEFT enabled. The transaction requires a specific username and password so that it can be accessed only by a specific person.
  • Register your name, mobile number, the central bank of India IFSC code, and other necessary particulars with your bank and verify them promptly.
  • Next, make sure to register the remitter’s bank details like name, IFSC code etc. It is to be noted that both the bank accounts  i.e. the one that transfers and the one that receives are NEFT enabled and have this specific option of the transfer.
  • As stated before, NEFT requires a specific time window. The person who transfers the funds needs to wait for their turn and for their window to open.
  • Once the portal is open, one can make payment by entering the amount to be transferred after confirming the OTP with the bank.
  • The fund will be successfully transferred into the remitter’s account as per the specified period.
  • A nominal charge is applicable if you exceed the minimum limit of fund transfer


  • There are certain restrictions when it comes to the number of funds that can be transferred using RTGS facility.  The minimum amount to be transferred is Rs. 2 Lakhs or more.
  • The process is similar to NEFT, which includes the registration of the person who pays and the remitter’s bank details.
  • A certain charges are applicable in case of exceeding the minimum limit of transfer in a day.


  • Since this mode of payment is made through the comfort of our mobile phones, there are no formal registrations to be made apart from the remitter’s bank details like their name, bank of India IFSC code, etc.
  • Similar to RTGS, some amount is deducted depending upon the funds transferred in case of exceeding the minimum limit.

What is the MICR Code?

MICR stands for Magnetic Ink Character Recognition. This code can be found in the bottom of a cheque leaf. It is a nine-digit code that holds highly specific information. The format is,

  • The first three digits denote the pin code of the city
  • The next three digits denote bank code
  • The last three digits denote the branch code

The speciality of MICR code is its global usage. Unlike IFSC code that is endemic to India, MICR code is used all over the globe to transfer money from one part of the world to another. The main function of the MICR code is to accelerate the clearing process.

How Exactly does MICR Accelerate the Process?

The MICR code as stated before is highly specific which hence helps to trace the path of a transaction with ease. The possibility of committing an error while filling a cheque manually is pretty high. To cut down this probability and to facilitate faster transfers, MICR is used. This has drastically cut down the incidents of bouncing back of cheques. Thus, saves time for both the parties. As the term denotes, the code is printed with iron oxide that is sensitive to machines and hence can be easily read. All banks in India have their unique MICR codes.

How is the MICR Code Read by the Computers?

The code is printed with iron oxide that is highly magnetizable. The first step involves the magnetization of the code. In technical terms, it is the process by which an object (here code) is exposed to a magnetic field wherein the object also exhibits magnetic properties. In the same reference, the code is also magnetized. As a result, the code shows magnetic properties like emission of radiation that can be identified in the form of a waveform. Next, the machine reads this waveform and converts it into a binary form that is recognizable by computers. A string of binary numbers is formed that reveals the unique MICR code. Since the code is specifically printed with iron oxide, the machine can identify this code even if there are impurities or any other markings like signatures or stamp seals on top of the MICR code.

Key Differences between the IFSC Code and MICR Code

  1. IFSC code facilitates the transfer of funds and tradable financial assets from one bank to another in India through NEFT or RTGS or IMPS modes of transfer. Whereas, MICR code is for accelerating the clearance of cheques.
  2. IFSC code is an eleven-digit code whereas MICR code is a nine-digit code.
  3. IFSC code denotes only the bank code and branch code. Whereas, MICR denotes the pin code, bank code, and the branch code.
  4. IFSC code is endemic i.e. it is used only in India. Whereas, MICR code is universally used.
  5. IFSC code may involve alpha-numeric characters. But MICR code is strictly numerical.

In a Nutshell!

IFSC codes and MICR codes are important for making transactions from any part of the country to another through NEFT, IMPS, and RTGS. The methods evolve from time to time in order to satisfy the customers' needs and desires.