A Walk-Through the Uses and Benefits of IFSC Codes for Fund Transfers

Benefits of IFSC Codes for Fund Transfers

Indian Financial System Code (IFSC) is a unique code for a bank branch. It contains 11 alphanumeric digits and is used by all the Indian banks, which have the facility of RTGS, NEFT, IMPS, and online payment settlement systems. The Reserve Bank of Indias (RBI) has issued this code to bank and its branches in order to streamline their electronic funds transfer process.

If you wish to transact money online through net banking, then providing IFS code of the beneficiary bank is mandatory. It is essentially asked when adding a payee or directly performing a quick transfer. You can easily search for an IFSC on specific bank’s and RBI’s official website.

Explanation of IFSC’s Structure

In the 11-digit code, the initial 4 characters signify the bank’s name. The 5th character is a zero and kept for future scope for expansion of the bank branch. The 6th character signifies the bank location. You can find this code on the cheque slip and cheque-book and the front page of the bank passbook.

For instance, the SBI IFSC starts with SBIN (representing the bank, State Bank of India), followed by a zero (0), and if the code is of Dwarka, New Delhi branch, then it will read as SBIN0004384, where the last 6 digits signifying the bank-branch.

The Benefits of IFSC Codes

Below provided are some of the benefits of using an IFSC.

  1. Smooth Instant Transfer of Money: By using IFS code, fund transfer online can happen quickly between a bank account to another without any errors. It saves time and is of great convenience.
  2. Locates a Branch Accurately: The code helps to identify the correct branch. It also denotes a branch by its location, eliminating the risk of duplication.
  3. Keep Away Frauds: Any transaction using this code occurs in a secured manner as each ban-branch has a unique IFSC. Thus, infringement by any third-party is impossible.
  4. Paperless Money Transfer: Unlike offline transfers and deposits, IFSC code facilitates online transactions, making room for paperless money transactions. Printing cost can be thus easily avoided and it is a wise way to ‘go green’.
  5. Addition of an Authentic Payee:When making a transfer online, you have to add a payee. The payee can be added only when you enter the IFSC of the beneficiary’s bank branch. A payee will be added successfully only when the IFSC and account number are in tandem with each other.

Online Fund Transfer Methods That Use IFSC

Below provided are the online fund transfer systems, which utilize IFSC.

  1. NEFT (National Electronic Funds Transfer): Funds transferred by using NEFT are settled in specific batches during a day. There is no ceiling on the minimum and maximum amount for transfer. You need to enter details such as beneficiary’s account name, account number, account type, and IFSC code of the branch, and the amount for transfer, a high security password sent to your registered phone number, to complete the transaction.
  2. RTGS (Real Time Gross Settlement): This system is used for high-value transactions. The minimum limit of the amount you can send is Rs. 2 lakhs. For the transfer to take place, you have to provide the payee’s account number, name, transfer amount, and the IFS code of the receiver’s bank branch. Amount transferred reflects into the bank account of the beneficiary immediately or within 2 hours.
  3. IMPS (Immediate Payment Service): Through IMPS, you can send money to a beneficiary instantly and on a real-time basis. You can use this service during holidays and weekends as well, unlike NEFT, where transactions do not take place during non-working weekends. IFSC code is mandatory to process IMPS transactions.

The above-given is a brief about IFSC code, its benefits, and uses for transactions via net banking and IFSC enabled payment apps/wallets. Refer this information if you need to make any relevant transactions using an IFS code.