Almost all of us transfer money regularly to our friend's and family members' bank accounts. There are many ways to transfer money to someone else bank account: NEFT, RTGS, IMPS, UPI, etc. Among these money transfer options NEFT, RTGS, IMPS are in use for a really long time. In comparison, UPI is a fairly new money transfer system and very popular as of now.
Undoubtedly, UPI is a convenient way to send money but it is several limitations. Like one can't transfer more than 1 lakh rupees using UPI on a given day. So, If you want to transfer an amount higher than 1 lakh rupees you will have to use the traditional money transfer systems like NEFT, RTGS, and IMPS. Usually, transfer limits on these systems are somewhere around 10 lakhs to 20 lakhs in some banks.
These systems are in use from the time when digital banking was not so popular. One can facilitate an NEFT or RTGS transfer even by visiting the branch of a bank. Nowadays it is possible to transfer money using NEFT, RTGS, or IMPS by Internet Banking or Mobile Banking. If you have ever tried to transfer money using NEFT or IMPS whether online or offline you might be asked to provide the IFSC Code of the bank account in which you want to transfer the money.
If you don't know the IFSC Code then you ask for it from the person to whom you are sending the money. There is no one fixed IFSC Code for every bank or city. It varies between each branch and bank. You might be curious to know what is this IFSC Code and why it is so relevant while doing money transfers. Here, in this article, I have explained all about ISFC Code. What are IFSC Code, its features, and use cases? So, stay tuned.
What is IFSC Code?
Let's start with understanding the full form of the IFSC Code. The IFSC Code is a short form of the Indian Financial System Code. It is a unique 11 digit Alphanumeric code provided by the Reserve Bank of India to facilitate money transfer across banks. When digital banking was in its infancy there was no way to transfer money instantly between two different banks. RBI came with the solution of the IFSC Code. A unique code was provided to each branch of supported banks. The main purpose was to identify a branch by this code.
You might be thinking why an IFSC Code is 11 digit. Let me explain it to you. The first four-digit of an IFSC Code denotes a Bank name and the last 6 digits denote the specific branch of the bank. The fifth character in between bank name and branch name is Zero. As an example, if an IFSC Code is HDFC0002773 then HDFC is the bank name and 002773 is the branch code. Separating the two of them is a zero. I hope from now whenever you will see an IFSC Code you will be able to understand its different characters.
IFSC Code Features
Let's understand some of the features of the IFSC Code now. An IFCS code helps in identifying branches of a bank. There are thousands of branches for many public and private banks. If there is no unique code assigned to them how can we differentiate between them? Giving a code will help in identifying those branches.
The most useful feature of the IFSC Code is to facilitate money transfer without any errors. If a person has entered the correct IFSC Code and bank details then there is little room for an error. Another feature of the IFSC Code is its ability to get used in different money transfer systems like NEFT, RTGS, and IMPS. So, whether you are looking to transfer money using any of these methods IFSC Code will do the job.
Bank IFSC Code Vs Credit Card IFSC Code
If you have a Credit card you might have got a Credit Card IFSC Code. You will be thinking about how the Credit card IFSC Code is different from your bank IFSC Code. The main difference here is Bank IFSC Code is different for all branches whereas Credit Card IFSC Code remains the same for a bank throughout all its branches. So let's say your Credit Card IFSC Code is HDFC0002773, it will same for all the other Credit Cardholders of the bank.
What is the full form of the IFSC Code?
The full form of the IFSC Code is the Indian Financial System Code.
Why is IFSC Code used?
IFSC Code is used to facilitate money transfer across banks in the transfer methods like NEFT, RTGS, and IMPS.
Are IFSC and SWIFT codes the same?
No, IFSC Code and SWIFT Code are not the same. Both these codes are completely different. IFSC Code is given to each branch whereas some banks have one SWIFT Code to process every International transaction.
So this is all about IFSC Code. I hope now you have a better idea about IFSC Code and why it is important in our banking system. The significance of the IFSC Code is very high in the banking system as it is required in money transfer methods like NEFT, RTGS, and IMPS. What are your thoughts about IFSC Code? Do let us know in the comments.