Difference between IFSC Code and MICR Code
Key Difference: In context to Indian banking, both refer to unique codes. IFSC code stands for Indian Financial System code. It is made up of eleven characters and used to identify the branch of bank. IFSC code stands for Indian Financial System code. MICR stands for magnetic ink character recognition. It is a security bar code that consists of eleven digits.
IFSC and MICR both can be used in context to financial system code. Most of us had heard these terms in relation to the checks. IFSC is indigenous to India whereas MICR code is used world wide for the transactions. Many people confuse between them and that is why in this article, we will explain the actual differences between the two.
IFSC stands for Indian Financial System Code. It consists of eleven characters and this code has been assigned by Reserve Bank of India for the identification of the bank branches. It uniquely identifies any bank branch in India. This code is of immense importance for carrying out the electronic payments in the country.
The components of this alpha numeric code are:-
- First four characters denote the code of Bank.
- the fifth character is a ‘0’ and this is reserved for future use.
- Remaining six characters define the specific branch of the bank.
The payment methods like RTGS, CFMS and NEFT in India uses this code. All the banks have been adviced by Reserve Bank of India to print the IFSC code on the checks issued by the banks to their customers.
MICR stands for magnetic ink character recognition. MICR code is a character recognition technology and helps in faster processing of checks. Like in India, every bank branch has been provided by a unique MICR code, and thus RBI can easily identify the bank branch and the banking takes place at a faster rate. It is a nine digit number. The components of MICR are:-
1. The first three digits refer to the city code (location of bank branch)
2. The next three digits represent the code of bank.
3. The last three digits refer to the bank branch code.
MICR codes uses a special ink which is sensitive to magnetic fields and thus information can be encoded in the magnetic characters. This is used for enhancing the security in the transactions. For example, a counterfeit check can be detected easily, as the magnetic ink line will not respond to magnetic fields and thus will provide an incorrect code when scanned. This code also helps in avoiding the errors that can be generated in the case of manual clearing of the checks.
Both are used to uniqely identify the bank branch but the basic difference between the two is that MICR code is written with a special ink and thus fraud cases can be easily determined on the basis of the check done through the magnetic scanner. IFSC code is alphanumeric whereas MICR code contains digits.
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