With the introduction of Financial System Code and fully computerization of the Indian banking sector, financial transactions have become smooth, easier and accomplished in quick time. The error rate in funds transfer including third arty transfers has almost been reduced to zero percent with quick facilitation of financial transactions. What’s more IFSC codes ensure that each financial transaction happens in real time but is fully secured and encrypted leading to absolute safety of funds and account information.
Understanding IFSC Code:
IFSC codes are a series of codes that represent each bank branch irrespective of its location or size. Every urban, rural or semi urban bank branch of both private banks as well as public sector banks has its own dedicated IFSC code. The codes have been developed as per the guidelines issued by the Reserve Bank of India.
The IFSC code is a series of 11 special characters which are a combination of numbers and alphabets. The high degree of encryption used in formulation of each bank IFSC code makes it completely secure and safe to be used in online funds transfer.
- The first four characters of IFSC code correspond to the name of the bank and are always alphabetical.
- The fifth character is reserved for future use and is always fixed as numeric zero as of now.
- The last six characters are a combination of numbers and alphabets and correspond to the exact bank branch of the associated bank.
Working Example of IFSC Code:
Let us consider the IFSC code for State Bank of India located in Ashram Road area in Ahmedabad, Gujarat. The IFSC code for the bank is SBIN0002628.
- First 4 characters are SBIN representing the name of the bank i.e. State Bank of India.
- The last six characters are 002628 which correspond to the Ashram Road branch of the SBI in Ahmedabad City.
- The fifth character from the front is o and reserved for future use.
Likewise let us find the IFSC code for SBI branch located on the Bhikaji Cama Place in New Delhi. The IFSC code of the corresponding branch is SBIN0007755.
- First 4 characters are SBIN representing the name of the bank i.e. State Bank of India.
- The fifth character from the front is o and reserved for future use as per RBI guidelines.
- The last six characters are 007755 correspond to the Bhikaji Cama Place branch of SBI in New Delhi.
IFSC Codes and Financial Transactions:
IFSC Codes are required for online banking systems to trace the starting point and culmination points for each financial transaction. Since each bank branch has a dedicated IFSC code, it tells the automated funds transfer systems including the National Electronic Funds Transfer (NEFT) and real time gross settlement (RTGS) where to begin and end each financial transaction. It is because of IFSC codes that all online transactions are possible with complete security and in double quick time.