What is the IFSC Code?

The term might be unknown to most Indians, but its use has been going on for quite some time in the country and has revolutionized the money transfer process between banks. IFSC stands for Indian Financial System Code and is provided by the RBI (Reserve Bank of India – the governing body for the banking sector in India).  The Indian Financial System Code (IFSC) is an alphanumeric code that uniquely identifies a bank-branch participating in the two main electronic funds settlement systems in India: the real time gross settlement (RTGS) and the national electronic funds transfer (NEFT) systems. The code consists of 11 characters that uniquely identify each individual bank branch.

Understanding the Code

Here is an example code: XXXX 0 YYYYYY
  • First four characters: The first four alphanumeric characters (XXXX) identify the bank.
  • Fifth character – 0: The fifth character is 0 by default for all IFSC codes and is reserved for future use.
  • Last six characters: The last six characters (YYYYYY) can be both numeric and alphabetic and form a unique code for every branch of this bank (that is identified with the first four characters).

How Is It Useful to You?

Any individual or company can wire money to any domestic bank account by using the Indian Financial System Code or IFSC code through NEFT or RTGS systems. The person sending the money would need to provide the IFSC, the name of the beneficiary as well as the account number to transfer the money to. The IFSC code is used for identifying the bank and the branch, and the other details identify the account where funds are to be transferred.

NEFT and RTGS Systems

NEFT as well as RTGS systems are used for transferring money to bank accounts within the country and both systems use the IFSC codes. In NEFT, there is no limit to the maximum, as well as, the minimum amount that can be transferred. The transfer is generally completed in 24 to 48 hours. RTGS, on the other hand, can be used for transferring the amount in as little as two hours, but the amount transferred must be at least INR 1, 00, 000.

Tax help, Tax problems, Tax Laws

No comments:

Post a Comment