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

Electronic fund transfers have gained popularity in India due to their convenience and efficiency, making them a preferred payment mode. Among the most crucial codes used in the Indian banking system are the IFSC (Indian Financial System Code) and MICR (Magnetic Ink Character Recognition) codes. These codes are essential for electronic fund transfers, as these codes direct the transactions to the appropriate bank and branch. For example, Indian Bank IFSC Code is a unique identification code used by banks in India to facilitate electronic fund transfers. In this article, we will explore the basics of MICR and IFSC code and understand their role in the banking process.

What is IFSC Code?

The IFSC code is a unique identification number assigned to a specific bank branch for electronic fund transfers. Comprising 11 alpha-numeric characters, it is granted by the Reserve Bank of India to each branch, thereby ensuring a unique identity for every bank branch across the nation. For example, every branch of the Indian Bank has a unique Indian Bank IFSC code.

Understanding The Format of IFSC Code With An Example

Let’s take a look at the Indian Bank IFSC Code:

Indian Bank IFSC Code: IDIB000C016


  • IDIB indicates the name of the bank
  • The fifth digit is always zero, which is reserved for future use.
  • The last six digits, 00C016, indicate the particular branch.

This Indian Bank IFSC code refers to a branch in Tirunelveli, Tamil Nadu.

Understanding The RTGS, NEFT, and IMPS Transactions

The three main transactions that require an IFSC code are:

  • RTGS – Real-Time Gross Settlement

RTGS is an immediate means of payment whereby funds are transferred instantly without any delay. It is a direct transfer of funds between two banks located anywhere in India, irrespective of time constraints. When an individual initiates an RTGS transaction, the funds are credited to the sender’s account in real-time, making it one of the most rapid ways of transferring funds within the nation.

  • NEFT – National Electronic Funds Transfer

Unlike RTGS, NEFT transactions have a specific period and are not immediate. The transfer can only be made within a restricted time frame, making it marginally slower than RTGS.

  • IMPS – Immediate Payment Service

Using IMPS, funds can be transferred within 20 seconds or less, rendering it the quickest compared to NEFT and RTGS. The prime benefit of IMPS is that it is easily accessible 24/7 via mobile devices, with no time constraints or designated days for transactions.

What is MICR Code?

The MICR code is a set of nine digits at the bottom of a cheque leaf. Its purpose is to speed up the clearing process of cheques. This code comprises the city’s postal code, the bank’s code, and the branch’s code. Unlike the IFSC code, the MICR code is used worldwide to transfer funds.

How MICR Codes Help in Saving Time on Clearing Cheques

MICR codes aid in speeding up the clearing of cheques by reducing the possibility of manual inaccuracies during cheque processing. The MICR comprises a nine-digit code imprinted using machine-sensitive iron oxide and is easily readable. It reduces cheque returns, thereby saving time for all parties concerned in the transaction. Additionally, MICR codes are exclusive to each bank in India, facilitating swift tracing and processing of transactions. 

How Computers Read MICR Codes?

The process of reading the MICR code by computers encompasses magnetization of the code, perception of the produced radiation as a waveform, and transformation of the same into a binary form, which discloses the unique MICR code. As the code is imprinted with iron oxide, the device can recognize it despite any contaminants or additional inscriptions present on the surface of the code.

Five Differences Between the IFSC Code and MICR Code

The major differences between the IFSC Code and MICR code are:

  • The purpose of the IFSC code is to facilitate electronic transfers, whereas the MICR code is intended for the clearance of cheques. 
  • The IFSC code consists of 11 digits, whereas the MICR code consists of 9. 
  • The IFSC code identifies solely the bank and branch codes, whereas the MICR codes encompass the pin, bank, and branch codes. 
  • The IFSC code is exclusively employed in India, whereas the MICR code is used worldwide. 
  • The IFSC code contains alpha-numeric characters, while the MICR code is restricted to numerical characters.


In conclusion, both the IFSC code and MICR code help in fastening the banking process. Understanding the differences between them and knowing their practical usage will help you transfer funds easily.

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