Due to the evolution of the digitalization, the statistics of the number of online money transfer from one account to another account has elevated drastically. This led to more and more usage of the online transactions and transfers. The demand and the popularity of the online money transfers stem as a matter of fact that they are hassle free and convenient as well as instant and cheap. You don't have to travel anywhere just a few details and finger clicks and you're done. But, have you ever noticed that while making online transfers from one account to another, there's a certain code that the Bank asks for- called as the IFSC codes. The IFSC codes are nothing but a key- bit information that is used during the online money transfer. Very few must be knowing about what exactly an IFSC Codes means? What the role and importance of it? In this article, we are going the know about the hidden truth about the IFSC codes and its materiality.
IFSC Codes: What are they?
The IFS codes stand for Indian Financial System Code. This code was launched by the Reserve Bank of India keeping in mind that the payments and the transfers online must be safe and secure.
Because, it is very much necessary to identify the bank and the branch where the beneficiary account is held, therefore, the IFSC codes came to space. This is why the IFSC codes are a mandatory, for different bank transfers. The code, identifies each and every bank branch participating. The IFS codes follow two payment and settlement systems in India. They are:
- The Real Time Gross Settlement (RTGS)
- National Electronic Fund Transfer (NEFT)
Pattern/Format Of The IFSC Codes:
The IFS codes are basically the alphanumeric key bit code. It consists of an 11 character code structure that is unique in its own way keeping in mind, that the banking institution and the branch where the beneficiary account is held. The first four characters denote the bank name, and the last six characters represent the branch of the bank. The fifth character is usually a zero, which is conserved up for the future use. The code of every branch is cited on the cheques of the account holder.
Lets take an Example
Let us consider an SBI branch IFSC code. The format of the SBI IFSC code
is somewhat like,
But, still, there must be a little confusion playing inside your head like, there are so many SBI banks itself in the same place, consider Delhi, Rajouri Garden. The Rajouri Garden itself has 2-3 branches of SBI, so how will we recognize the IFSC codes for the different branches???
Well, that's not a big issue. There are some banks which have more than one branch in the same city, in that situation which differs from one branch to another branch by using different last seven digits of IFSC. It is also known as the Bank Branch Locator.
Let us assume, the SBI branch of the Rajouri Garden, it has two branches located at same area but still, they differ, it is the cause of the different IFSC digit codes. Like one branch of the SBI has an IFSC code of "SBIN0007911" whereas, the other branch has the IFSC code as "SBIN0007000". We observe that there is a change in the last seven digit number to differentiate the branch.
What is the Role of the IFSC codes?
The IFSC Codes plays a very vital role when transferring money from one account to another through various modes such as:
All these options are fundamentally connected with the inter bank money transfer but they all perform the task in a different way. The common chain between these varied options is the bank IFSC Codes system.
It is also called as the National Electronic Funds Transfer (NEFT). It is widely used nation wide to transfer money from any bank branch to any other bank branch.
- To be a part of the NEFT family, the bank branch must be NEFT-enabled.
- There are about 75,000 banks branches (approx) that are associated with the NEFT online funds transfer.
- The complete list of the NEFT associated banks branches are available at the official website of the Reserve Bank of India (RBI).
- The individual firms, associations, and corporate offices can also transfer their funds using NEFT.
- The walk-in customers who do not have an account can also deposit and transfer their funds using NEFT to the respective beneficiary. These types of customers have been provided with a certain transaction code (Code No. 50) to perform an online transfer, along with that they also have to mention their proper details including complete address,name, and telephone number.
- Thus, NEFT provides a very safe and shielded way of transferring funds even without the need of having a bank account.
- The working hours roll in batches from 8 am to 7 pm. Lately, its working on hourly batches with twelve settlements on weekdays and six settlements of weekends(Saturday) 8 am to 1 pm.
Working Schema Of NEFT
- If any firm or association or corporate office tends to transfer funds online through NEFT has fill in an application by proving all the details of the beneficiary like (the name of the beneficiary, name of the bank branch of the beneficiary, its IFSC and account type and name along with the amount to be transferred).
- The applications are available at the originating bank branch. Customers having a net-banking facility can also transfer the funds online. Some of the banks also offer the NEFT facilities in the ATMs itself.
- The walk-in customers have to give their complete details (name, address, telephone number) to the branch if in case that the funds have not been transferred successfully they can refund it later to the customer if the transaction got rejected or returned for any reason.
- Now, the originating bank branch fabricates a message and then sends to its NEFT service center.
- The NEFT service center then forwards the message to the NEFT clearing center (NEFT Clearing center, Reserve Bank of India, Mumbai) to be included in the next available batch.
- The Clearing center then sorts out the online fund transactions on the basis of the bank branch wise and prepares account entries to receive funds from the different originating banks (debit) and give the funds to the destination banks (credit). Therefore the bank wise remittance messages are forwarded to the destination banks through the NEFT service center.
- The destination banks receive an inward remittance messages from the NEFT Clearing center and transfer the credits to the beneficiary customer's account.
The Processing and the Service Charges of the NEFT
NEFT offers certain processing and service charges for each particular batch of transactions. Every Bank decides their charges and charges differ from Bank to Bank.
For inward transactions at the destination banks (credit to the beneficiary's account), there is no charge levied on the beneficiaries.
For Example, NEFT Charges for SBI for the outward transactions to the originating banks – charges are applied to the remitter
- For transactions up to Rs 10,000 and not exceeding has (Rs 2.50+service tax).
- For transactions above Rs 10,000 to 1 lakhs not exceeding pays (Rs 5+service tax).
- For transactions above 1 lakh to up to 2 lakhs not exceeding pays (Rs 15+service tax).
- For transactions above Rs 2 lakh and not exceeding pays (Rs25+ service tax)
The charges applicable for funds transfer from India to Nepal
have a different charge scheme. The concessional charges to transfer funds under this scheme:
- Originating Bank Branch India- Max Rs 5 per transaction.
- State Bank Of India – Rs 20 per transaction if the beneficiary is connected with the Nepal SBI Ltd (NSBL). The State Bank of India shares the amount equally with NSBL. NSBL does not charge any extra amount for crediting the account of the beneficiary.
- If in case the beneficiary does not maintain an account the NSBL charges Rs 50 for the remittances up to Rs 5000 and Rs 75 for the remittances above Rs 5000.
RTGS (Real Time Gross Settlement)
The RTGS stands for the Real Time Gross Settlement. This is basically a fund transfer system where the funds are transferred from one bank to another bank in "real time" and on a gross basis. The term Gross settlement means that the transaction is done on one on one basis without merging or bunching with any other transaction. Once the payment is processed, the payment is considered as final and immutable.
Features of the RTGS (Real Time Gross Settlement)
The RTGS has some specific features which stand out in every factor.
- It is the fastest possible money transfer system of the banking channel.
- The transaction systems are not subjected to the waiting period since all the transactions are done in the real time and they are settled as soon as they are processed.
- This is mainly used for high-value transactions and they receive an immediate clearing.
- The minimum amount to be remitted is 2 lakhs. There is no maximum limit for this.
- The working hours for weekdays is from 9:30 am to 4:30 pm and for Saturday it is 9am-2pm.
Working Schema of the RTGS
- For sending money under RTGS, both the sending and the receiving bank must be RTGS enabled. If anyone of them is not RTGS enabled then one cannot do the further transactions.
- If you want to transfer funds from your account to another bank account then you need to go the bank where you have your bank account. Most of the banks now a days, are providing the RTGS facility in the net banking option. So if you are registered with the net banking facility then you can avail it online.
- Request the banker for an RTGS
- The banker will generate a RTGS request to the other bank where you want to send your money.
- Money from your bank account will be routed through RBI. RBI after sending money to the receiving bank will inform your banker that the money transfer request under RTGS has been sent.
- The banker then informs the sender after getting the message from the RBI.
- All these processes takes place in real time and the transaction is completed in seconds.
- If in case the fund transfer has not been successfully attempted then the RBI returns the money to the banker and the banker then returns it back to you.
Processing and Service Charges For RTGS
The processing and service charges may vary from bank to bank. Following are the normal fees payable per transaction:
The inward transactions are free in case of the RTGS.
For outward transactions:
- For transactions starting from 2 lakhs to 5 lakhs, it is Rs 30 per transactions
- For transactions above 5 lakh is Rs 55 per transaction.
Details Required For the RTGS Transactions
- The amount of money to be sent.
- Your bank account number.
- The Bank account name, number and the name of the person to whom you are going to send the money.
- IFSC number of the bank to which you want to send the money.
IMPS (Instant Money Payment System)
Also known as the Immediate Payment Service. For a mobile obsessed country like India, this mode of fund transfer system is just like an icing on the cake. As the IMPS offers a 24*7 facility for online funds transfer and anyone can transfer money anywhere without wasting their time standing in the queue to wait till their turn come in the bank. The IMPS was launched by the National Payment Corporation of India (NPCI)
. So, from now on, we don't have to worry even if we forget to bring our ATM card, your mobile phone saves your life, provided that it should be linked to the registered bank account.
Features of the IMPS
IMPS offers a 24 hrs facility of transferring money from one account to another anytime and anywhere whether he/she uses a low-cost device or a high-end smartphone device.
For using an IMPS service, the user must know the mobile number of the payee which is registered or linked with the bank, the seven digit MMID(mobile money identifier), and the sender's four digit pin.
IMPS can be used in three ways:
- IMPS using MMID
- IMPS using Aadhaar Card.
- IMPS using IFSC Code.
There are a lot of benefits which you can achieve through IMPS like, you can pay your grocery bills through your mobile phones, but you need to make sure that both the money sender and the receiver must be linked and registered in IMPS. You can make most of the payments using your mobile phone rather than using the ATM cards.
Where can you use IMPS??
IMPS can be used anywhere any device starting from the low-cost mobile phones to the latest android and other smart phones. You can select the IMPS method as per your phone compatibility. The users can also use through net banking:
- For smart phones- the users can download the Bank App/ SMS/ Wap/ USSD
- For Basic phones- SMS/USSD
- Internet Banking facility
There are about 68 banks that are linked and registered themselves under IMPS. The prepaid payment providers such as Oxigen, m-Pesa, Airtel money, m-Rupee, UAE-exchange etc allow to send and receive money using your mobile phone. You don't require a bank account for this. For SMS based IMPS transactions, there a certain limit of Rs 5000 per day per account. For mobile based apps it is Rs 50,000.
How To Use An IMPS (Step-by-Step) Procedure
1. Registration Process for the Sender
Firstly, register yourself for mobile banking service facility at your bank branch.
2. Registration Process for the Receiver
- Get the mobile money identifier (MMID) and MPIN from the bank.
- After generating the MMID and MPIN, download the software or the required app for the mobile banking. (you need to make sure that the app is compatible with your phone) otherwise, you can go for the SMS facility.
Link the mobile number to the bank account. Get the MMID from the bank.
For the Sender(Remitter)
- Login to the application select the IMPS menu, if not you can also choose the SMS option even in your mobile.
- Enter the beneficiary(Sender) mobile number, MMID number, the amount and your IMPS pin which consists One Time Pin and the last three digits of the M-PIN.
An example, of the IMPS transfer SMS, is shown below
To Receive Money:
- The One time PIN that you will receive is valid for only 1 hour.
- Note the transaction reference number for the future query purpose.
- Wait for the confirmation SMS when you credit or debit any amount.
To receive money from the sender you need to perform the following steps:
- Share the mobile number along with the MMID number.
- Ask the sender to send the money using your mobile number and MMID
- Check for the confirmation SMS, if the amount is credited to your account or not.
- Note down the transaction reference number for future purpose.
IMPS using Aadhaar Card
Aadhar card linking to your bank account? Strange right? Rewind 7 years back, when we were registering ourselves for aadhar card the person who was generating our information for Aadhaar card took the biometric fingerprint image as well the iris image. Do you know why? It is because these are one of the most unique features of our body. No two person on earth can have the same iris image and fingerprint. Thus, keeping that in mind the NPCI introduced a new feature of linking your bank account with the aadhar card.
This is a new way of receiving money from the bank account.You don’t have to use your Debit card, or your signature. You don’t have to stand in a queue for a long time in the Bank branch and visit the bank again and again. Just the aadhar card with you and you are good to go. It uses the Aadhaar card for the authentication purpose. Like, UPI and USSD this is another initiative by the NPCI.
IMPS using IFSC
99% of the banks nowadays, are using the IMPS using the IFSC technique. It is the smart approach towards the advancement of technology. It is quick as well as safe and secure. Its 24*7 availability has made it more convenient to use. During Sundays, also you can avail this facility without any problem.You need to have an imobile facility for performing any sorts of payments and transfers.
- is the internet banking facility that is provided by each and every bank, to the customers to stay connected with their bank account anytime without any hassle. One must have the internet facility to use this. The user can check his or her, account balance, account history as well as can transfer and deposit the cash to the other person of the same bank otherwise from a different bank also.
Methods Of Transferring Money Using IFSC: [Step by Step Process]
You can perform this banking facility either through the desired Bank App otherwise visit the official website of the bank where you have the account.
- Login to your registered bank account. Let us take for example- Kotak Mahindra
- After login in, click on the Payments and Transfer option which is at the top of the website.
- After clicking the payment and the transfer option, in the first section, you have Transfer type where you need to choose the transfer type method. Choose the option IMPS funds transfer.
- After choosing the IMPS funds transfer option you will be given two options:
- Choose the IFSC option.
- After selecting the IFSC option, fill in the account details, the beneficiary account number and type.
- Then mention the ISFC code of the beneficiary Bank account.
- Select the amount of Cash, you want to transfer. [Maximum limit of the transfer is Rs 50,000/-]
- Remarks- it’s optional
- Then click the Pay Now button.
- After clicking the Pay Now option. You will get the confirmation details that the funds are transferred to the desired beneficiary account and the transaction reference number, which you can save it for future use.
- If in case, the transaction is not successful, no need to worry the bank will refund back the amount within 48 hrs.
This method is one of the quickest ways for transferring and depositing cash. You need to make sure that you are connected to a fast Internet service.
Aadhaar Enabled Payment System
Aadhaar card number- the 12-digit number mentioned on your aadhaar card.
Bank IIN number or name.- its a six digit unique identification number that is given or issued to each and every bank. The IIN number represents the bank name.
Fingerprint- the customer’s fingerprint as it denotes the uniqueness of each person. (Fingerprints do not match )
You can perform the following types of banking transactions:
- You can enquire about amount of balance in your account. You need to give your authenticated fingerprint scanned to the machine which links up your account and aadhar card and gives you out the information of your balance of your account.
Cash withdrawal- Using your fingerprint, you can also withdraw the desired amount of cash.
- With the help of both IIN and fingerprint you can deposit cash instantly.
Aadhar to Aadhaar Transfer.-Its just the same as that of using Paytm, instead of a Paytm (phone number) we are using Aadhaar card. The funds are transferred from aadhaar to aadhar. [Note- you need to make sure that both the person must have the aadhaar linked to their bank account]
For doing the aadhaar transactions you need to remember your 12 digit aadhaar number, and you are good to go.
Advantages of using IMPS using Aadhaar Card [AEPS]
Through AEPS, we can perform both financial and non-financial transactions- financial transactions are those type of transactions which involves money and payment, like depositing money in the bank account, purchasing goods and buying properties etc. Whereas, the non-financial transactions means those type of transactions which do not involve the financial issues. They do not involve in the transfer of online funds. ex- change in personal details such as name, address or change in the bank details.
- No requirement of putting the signature or using a debit card.
- Its fast, safe and secure.
- No duplication of your finger print.
How AEPS Works
The NPCI has launched this new technique AEPS, which facilitates the depositing and borrowing of the money a way more easier and faster just using your Aadhaar card details.
- Here, the Aadhaar card is linked to your desired bank account, and this process of linking aadhar card with your bank account is called as “Seeding”. This is the first and foremost step of how AEPS works. The aadhaar number is sent to the bank by the customer.
- After receiving the aadhaar number from the customer, the bank uploads the number into a “NPCI” mapper which is used for the purpose of routing the transactions to the destination banks.
- The NPCI mapper uses the aadhaar card along with the unique identification pin called IIN. This is a 6- digit unique identification pin which is issued by the NPCI to the respected participating bank.
- To verify, the bank would take your fingerprints in a machine. The machine will give you the fingerprint details to the Aadhaar payment App.
- The fingerprints tally your fingerprints with the fingerprints you have given during the Aadhaar registration.
- If it matches the system , then you are permitted to do the further transaction, otherwise, it denies the input instruction.
- After getting the permission accepted, Now, you are all set to make deposits and withdraw cash or make money transfers by enabling AEPS.
Charges For the AEPS
The charges for the AEPS, can go up to Rs15 per transaction. For AEPS, three institutions are involved and these charges fees.
- UIDAI, may or may not charge the nominal fees for the authentication.
- The NPCI charges 10 paise for authentication purpose and 25 paise for the settlement.
- The bank can charge around 1% of the transaction if it is connected to the other bank (receiver side). The minimum fees for the other bank transaction starts from Rs 5 and goes to a maximum limit of Rs 15/-
AEPS, might turn out to be a little expensive than the UPI and USSD, but it has helped a lot of people who are living in the rural places, or for those who are illiterate. It has created a lot a convenience for those type of people. It’s like bring the bank to your door step, no need of wasting time and money traveling and searching for ATMs and Banks. That is why the Government calls, the AEPS as the “Micro ATM”
Tips To Ensure The Correct Usage Of IFSC Codes
- Verify the codes for a trusted websites such as official sites of RBI.
- Check the IFSC number twice before clicking on the submit button or add the beneficiary.
- After adding the beneficiary, start with transferring a smaller amount (Rs 10/-) to the receiver's account, Ensure that the details you have provided must be correct. Wait for receiving a confirmation SMS to the receiver. When the receiver receives the amount and the confirmation receipt you can then proceed for further transferring a larger amount.