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IFSC: Indian Financial System Code| Use, Meaning, NEFT, RTGS in India

Updated on: 16 Jan, 2024 05:49 PM

Whenever we open a bank account, you are provided with an IFSC code. And whenever we have to provide our bank details to someone, it is important that IFSC code is provided as well. But have you ever wondered what IFSC code is all about? And why is it so important in all bank details and transactions? If you are wondering about the same, then delay not. Our blog on IFSC code will answer all your questions.

What is an IFSC code?

IFSC code is an abbreviation for Indian Financial System Code. This code is assigned by Reserve Bank of India (RBI) to all the branches of the bank. Every branch of a bank extending NEFT services to its customers is allotted this unique 11 characters long number. This code is a mandatory prerequisite for online payment facilities like

  • NEFT (National Electronic Fund Transfer),
  • RTGS (Real-time Gross Settlement), and
  • CFMS (Comprehensive Financial Management System).

This 11 characters long code is cryptic in nature. It is made up of several things like:

What is an IFSC code
  • The first four characters of this unique code represent the bank.
  • The fifth character of the code is ‘0’ in the beginning. It is usually saved for future uses.
  • The last six characters of this code are the code of the bank’s branch.

If you want to know the IFSC code of your branch, you can either check the cheque book issued to you by the bank or you can also check the passbook of your account. You can also go to the official website of the Reserve Bank of India to know the IFSC code of your branch. There is a less probability of any bank changing their IFSC code. But recently, the State Bank of India changed the IFSC code of all its branches across the country. The IFSC code can also be used if you are buying mutual funds or any insurance policy through net-banking.

Why is the IFSC code important?

The importance of IFSC code can be ascertained by looking at the points mentioned below:

  • Source of Identification: It is a unique number which is used for identifying different branches of the bank.
  • Facilitates fund transfer: IFSC removes all the errors which might hamper the process of transferring funds online.
  • Simplified process: By using IFSC code, the process of transferring funds via RTGS/NEFT/IMPS has been made easier and reliable.

How does the IFSC code operate?

In the financial world, there are two major tools which are used for internet banking and they are NEFT and RTGS. For using these payment gateways, IFSC (Indian Financial Code State) is mandatory. It recognises every branch of all the banks uniquely. Resultantly, making it the most reliable source of transferring funds online.

As mentioned above, this code is allotted by the Reserve Bank of India and is a combination of alpha-numeric characters. To understand the code better, let’s look at the example below:

Let’s take HDFC bank for this example. As explained above, the first four characters represent the bank. So it will be ‘HDFC’. The fifth letter is a ‘0’ which is normally reserved for future purposes. The remaining characters are the code of the branch of the bank. So it would be, ‘HDFC0codeofthebranch’.

Detailed information about the ‘Modes of Payment’:

IFSC plays a major role in transferring funds online using several payment options like NEFT, RTGS, and IMPS. With demonetisation and technological shift, more and more people are opting for online payments using various methods. For detailed information on how IFSC is used in these payment gateways, read further.

Role of IFSC in transferring money via NEFT:

NEFT is National Electronic Fund Transfer. Amongst all the modes of payments, NEFT seems to be the most popular one. It follows a different pattern of transferring funds from one bank to another, i.e, your money is transferred to another bank account in different batches.

These batches have been set according to the weekdays and have been framed within a particular set of time.

  • On weekdays (Monday to Friday), 12 payment batches are operational between the time slot of 8 am to 7 pm.
  • On weekends (Saturday), only 6 payment batches are operational from 8 am and 1 pm.

Generally, banks do not have an upper limit on the amount which needs to be transferred. However, the State Bank of India has imposed a limit of Rs. 10 lakhs on transfers done via this mode.

Transfer money via NEFT:

To transfer money via NEFT, you need to make sure that your bank extends the facility of transferring funds online via NEFT. Additionally, if you don’t have a net-banking account, you need to create one by registering for it on the official website of your bank. For registration, your mobile number should be registered with the bank. Once your registration is complete, you will receive login credentials for your net-banking account. After you have the credentials, follow the steps mentioned below:

  • Log in to your net-banking account using your credentials.
  • For the next step, you need to add the person whom you wish to transfer funds as the ‘Beneficiary’.
  • To add the person as beneficiary, you will need his/her name, account number and IFSC code of the bank’s branch where they have their account.
  • Once the beneficiary is added, you will have to see through the waiting time before which you cannot transfer the funds.
  • After the waiting time is over, log in to your account again and go to ‘transfer funds’ option. From the list, select the beneficiary to whom you want to transfer the funds.
  • For the last stage of the transfer process, you need to enter OTP (One-time password) which will be sent to your registered mobile number. With this, your transfer will be scheduled for the next available batch of fund transfer.

You might have to pay a minimal charge for transferring fund. The charge is mostly dependant on the amount that you have transferred. NEFT also comes with several limitations like funds can’t be transferred at the time of your preference and on bank holidays.

Role of IFSC in transferring money via RTGS:

RTGS is the Real Time Gross Settlement. You need a net-banking account for this procedure also. It also operates according to the time slots. The process of transferring funds is similar to that of NEFT. Before transferring, it is advisable that you check if your account and the account of your beneficiary are compatible with the RTGS process.

  • On weekdays (Monday – Friday), money can be transferred anytime between 9 am to 4.30 pm.
  • On a Saturday, money can be transferred anytime between 9 am to 2 pm.

RTGS services are not available on a Sunday.

Main features of RTGS:

The main features of RTGS (Real Time Gross Settlement) mode are

  • Transfer for a high-value amount. To avail of this service, you need to transfer a minimum amount of Rs. 2 lakhs. However, there is no upper limit on the amount of money transferred via this method.
  • With RTGS, the recipient receives money within 30 minutes of initiating the transfer procedure.

The transaction fee is dependant on the amount transferred via this mode.

Role of IFSC in transferring funds via IMPS:

IMPS is the Immediate Payment Service. National Payments Corporation of India launched this service in the year 2010. It is a 24*7 fund transfer service which is functional throughout the year.

  • You don’t need to follow a different procedure to transfer funds via this method. The process is similar to that of RTGS and NEFT.
  • As per the other methods, you will need the name, account number and IFSC code of the beneficiary. Apart from this, you also need an MMID code for this procedure.
  • You can get this MMID code from your bank as it is used particularly used for this method. For identification, it is a seven digit code.
  • The charges for transfer via this method are decided by the bank depending upon the funds transferred.

Role of IFSC in transferring money via SMS:

With the help of IFSC code, you can also transfer funds via SMS. Follow the steps mentioned below to transfer funds via SMS:

  • To avail of this facility, your mobile number should be registered with the bank and you need to activate mobile banking facilities.
  • For registering yourself, you need to fill a form provided by the bank for activating your mobile banking services. Once the registration process is complete, you will receive a starter’s kit which will contain essential information like mobile banking ID and the pin.
  • Post this, you will have to create an SMS. Start by typing ‘IMPS’ followed by details like beneficiary name, bank account number, IFSC code of the bank, and in the end the amount that you want to transfer.
  • After this message, you will receive a confirmation message wherein you will be asked for fill-in mPIN for security reasons.
  • After entering the PIN, click on ‘OK’ and the amount will be transferred to the beneficiary’s account.

Find the IFSC code of your bank branch

Generally, the IFSC code is mentioned on the cheque books if your bank is extending NEFT facilities. You can also call any branch on their helpline number to know about the IFSC code. In case you want to verify or need the IFSC code, you can follow the steps mentioned below:

  • To check the IFSC code, visit the IFSC code website by clicking on the link mentioned:
  • Go to the ‘Find IFSC Code / MICR Code using the lists below’ section.
  • Herein, click on ‘IFSC Code – Select your bank’ option. From the dropdown list, choose your bank.
  • Once you have selected your bank, select state, district, and branch respectively.
  • After you have entered all the details, the following window will display information like bank name, bank branch, IFSC code, MICR code, state, district, city, branch code, branch address, phone number.

By following the steps mentioned above, you can find the IFSC code of any registered bank.

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CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.