When you are sending money, you want to ensure that your funds reach the intended bank. Transferring funds to the wrong bank can cause multiple problems, the transaction cannot be automatically reversed.
You would have to contact your bank, discuss what happened and potentially wait an extended period of time for your money back. If you even get it back, that is. A huge inconvenience.
Sending funds to the wrong bank can be easily done, whether you supply the wrong details for whatever reason, or maybe the banker is to blame. 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 Indian Financial System Code. An IFSC code consists of 11 characters. Usually, the first 4 characters identify banks name. The fifth character is 0. The last 6 characters identify the branch of the bank. All of the payment processes including RTGS, CFMS and NEFT utilise these codes.
Why is Indian Financial System Code needed?
Traditionally, transferring funds was done off of the internet. Face to face with a banker. You would detail how much money you want to transfer and to what destination bank account. With today’s technology, there has been a massive shift to online transactions and it is the new trend.
To make 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 to. As well as the details of both respective banks. Details such as IFSC codes.
What are the benefits of Indian Financial System Code?
There are numerous benefits of using an IFSC code. To keep it short, here’s a summary:
- They allow for online financial transactions.
Now you no longer have to go down to your local branch, stand in a queue for an extended period of time, just to process small money transfers. With the Indian Financial System Code, it no longer matters where you are. You can make the transaction anywhere in the world.
- They speed up the process of transferring funds.
Money can now be transferred in a matter of minutes. Making the whole process much more efficient. This is very helpful when you need to transfer money quick in an emergency.
- Limits possible fraud.
Each branch and their respective banks will have this unique IFSC-code. This makes the process more safe and secure. Every transaction using IFSC codes will have a start and an end point. Ensuring funds are easily tracked.
- Open 24/7.
Unlike at your local branch, you can access your bank account online at any time, on any day.
- Online banking.
You can pay your bills, check your balance, and transfer funds all thanks to the Indian Financial System Codes. Fast and efficient.
Who controls fund transfers?
The Reserve Bank of India, or RBI. Established as the central banking institution, controls all of the fund transfers in India. It is their job to oversee all of the transactions. They provide and develop the structure for all payments, such as RTGS. All will the help of an IFSC code.
How does the Indian Financial System Code help them?
By using the IFSC codes, RBI can easily identify where funds have been transferred from, and were they end up. Also known as the start and end points. It’s clear to see, this makes the process much more efficient as they can monitor all transactions. IFSC code also helps to eliminate errors.