When you send money, you want to make sure that your funds are getting to the right bank. Transferring funds to the wrong bank can cause several problems, the transaction cannot be canceled automatically. You will need to contact your bank, discuss what happened, and possibly wait a long time for your refund. If you get it back, that is. A huge drawback.
It’s easy to send funds to the wrong bank, whether you’re providing the wrong information for some reason, or maybe the banker is responsible. The point is, it can easily happen.
This is where the IFSC code comes into play.
What is an IFSC code?
IFSC Code, is also known as the Indian Financial System Code. An IFSC code consists of 11 characters. Usually the first 4 characters identify the bank name. The fifth character is 0. The last 6 characters identify the branch of the bank. All payment processes, including RTGS, CFMS, and NEFT, use these codes.
Why is the Indian Financial System Code needed?
Traditionally, money transfers have been done over the Internet. Face to face with a banker. You would detail how much money you want to transfer and to which destination bank account. With today’s technology, there has been a massive shift towards online transactions and this is the new trend.
To complete a financial transaction online, you no longer need to be face to face with a banker. You just need to know where the money is coming from and where it is going. As well as the contact details of the two respective banks. Details such as IFSC codes.
What are the advantages of the Indian Financial System Code?
There are many advantages to using an IFSC code. In short, here’s a summary:
- They allow online financial transactions.
Now you don’t have to go to your local branch, stand in line for an extended period, just to process small money transfers. With Indian Financial System Code, it doesn’t matter where you are. You can carry out the transaction anywhere in the world.
- They speed up the process of transferring funds.
Money can now be transferred within minutes. Make the whole process much more efficient. This is very useful when you need to transfer money quickly in an emergency.
- Limits possible fraud.
Each branch and their respective banks will have this unique IFSC code. It makes the process safer and more secure. Each transaction using IFSC codes will have a starting point and an end point. Make sure the funds are easily tracked.
- Open 24/7.
Unlike your local branch, you can access your bank account online anytime, every day.
- Online banking services.
You can pay your bills, check your balance and transfer funds using codes from the Indian financial system. Fast and effective.
Who controls the transfer of funds?
The Reserve Bank of India, or RBI. Established as a central banking institution, controls all remittances in India. It is their job to oversee all transactions. They provide and develop the structure of all payments, such as RTGS. All this using an IFSC code.
How does the Indian Financial System Code help them?
Using IFSC codes, RBI can easily identify where the funds were transferred from and where they ended up. Also called points of departure and arrival. Clearly this makes the process much more efficient as they can monitor all transactions. The IFSC code also helps eliminate errors.
Source by Ramit Soni