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IFSC Code and MICR Code Explianed

Understanding IFSC Code

IFSC code or the Indian Financial System Code is a distinctive code that is assigned to each bank. It is an alpha numeric code that is different for each bank. No two IFSC codes are the same. It is used for a variety of payment system in the country. The code usually contains 11 characters and is used to identify a bank belonging to a particular branch and state. Among the 11 characters, the first 4 refers to the bank code. The 5th character usually a Zero, retained as a control character and the remaining 6 characters is used to recognize the bank branch.

Importance of IFSC Code

It is vital to know the IFSC code for the bank with which you hold an account. Money transfer becomes easier and secure. If you are sending money to someone, along with their account details it is necessary that you know their bank’s IFSC code too. Only then you can add them as your beneficiary. By knowing this small piece of information you can manage your account from any part of the world.

Understanding MICR Code

 Magnetic ink Character Recognition which abbreviates to MICR on the other hand is a character detection technology used predominantly by the banking industry to expedite the processing and clearance of cheques and other important documents. The MICR line is located at the bottom of a cheque and contains the bank name, code, account number and cheque number in addition to a control indicator. This allows the MICR readers to scan and read the information which is sent to a data collection system. The MICR font followed by most of the countries is E-13B which has a 14 character set and the other font being CMC-7 with 15 character set. The former is used in USA, Canada, Australia and several other countries while the latter finds its use mainly in UK and various parts of Europe. The ink, usually a magnetic ink or a toner that is used to print the characters in this special font has iron oxide in it and when it is passed through the reader the ink gets magnetized. This in turn is passed over the MICR read head which forms a wave pattern easily recognized by the system. Instead of manually going through each and every cheque deposited, MICR accelerates the whole process. The room for error when compared to optical recognition systems is negligible.

Importance of MICR Code

MICR reading is safe and reliable when it comes to reading cheques or documents that has concealed marks or has been overprinted. In addition to cheques and documents, this technology can be used for encoding information on various applications such as credit cards, coupons, shopping vouchers, airline tickets and promotional offer coupons. Unlike Barcodes, MICR is easy to read. Since the time it entered the banking field, cheque fraudulent cases have considerably reduced and checking the legitimacy of important documents have become simple. There is no doubt that both IFSC and MICR have made the banking process a wee bit faster, safe and trustworthy.

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