As Internet banking is becoming a snowball phenomenon, banks have to increase the accuracy and security of such transactions. One of the ways to do this is to make details like the IFSC number of participating banks a mandatory prerequisite when conducting these digital transactions.
What is the IFSC Code?
The Indian Financial System Code is a unique 11-character alphanumeric code given to a bank branch if it facilitates online banking. An IFSC like HDFC0000485 is made up of three parts: the first four alphabetic characters identify the name of the bank, the fifth character is a ‘0’ which is kept as a buffer for future expansions and the last six characters represent the bank branch. . address and are usually numeric, but can also be alphabetic.
IFSC is used to transfer funds electronically through services such as National Electronics Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Immediate Payment Service (IMPS). To successfully complete such a transaction, the payer must have the IFS code of the beneficiary’s bank.
IFSC benefits
• Save time and money:
The biggest advantage of online banking over conventional banking is that it saves time. You can skip the traffic, queues and formalities of conventional banking and simply complete your bank transaction in minutes at your comfort and convenience. IFSC facilitates these types of online transactions and saves you time. Also, online banking enabled through IFSC helps make banking paperless and therefore saves money. This electronic banking is also respectful with the environment, as well as being simpler and faster.
• Shorter transfer time:
IFSC-enabled online banking also saves time, effort and money, conventional services such as demand money orders and cashier’s checks require for a successful fund transfer. Also, the transaction is reflected in the sender and payee accounts immediately, as the IFSC details are already confirmed. Also, aside from bank service charges (if applicable), no additional money is spent to make such a fast transaction.
• Safe and transparent:
For online banking, users must submit key credentials, including the beneficiary’s IFSC, which is subsequently verified by the bank. Only after verification of the payment bank, a user can make an IFSC-enabled funds transfer. This makes the process safe. In addition, as online banking through the use of IFSC removes the human interference factor from the financial transaction process, such banking becomes more transparent and accountable and reduces the possibility of any type of scam that can be carried out in the system. Furthermore, in online banking, since both the sender and the recipient account holders are informed of the transaction immediately via SMS or email, such banking is less likely to be fraud or loss.
• Help in bank reconciliation:
IFS codes are unique to each participating bank branch, which is how they help in the reconciliation and validation of a bank’s data. Without IFS codes, the accuracy of electronic transactions will decrease and banks are at risk of inaccurate transactions. Additionally, since all banks are now digitally enabled, online fund transfers facilitated through IFSC help them achieve rapid reconciliation. Additionally, IFSC’s mandate for individual and corporate transactions helps banks disburse funds quickly and correctly. IFSC also makes it easy for banks to communicate and understand transactions at their branches and with other banks as well.