Difference Between IFSC Codes and MICR Codes

When you read about money transfers or certain financial transactions, you would come across the terms IFSC or MICR codes. Many people do not know what IFSC and MICR codes stand for and the difference between the two. These codes are used for recognizing banks and branches and to ensure secure transactions.

Difference:

Mentioned below are some of the differences between IFSC and MICR codes:

MICR stands for Magnetic Ink Character Recognition. It is present on the bottom white line of every cheque. The white line is called the MICR Band. MICR code is used by the banks for processing and clearing cheques and other documents. This code is written using a special magnetic ink, which helps in identifying fraudulent cases easily.

MICR code consists of 9 digits, of which the first 3 denote the city, the next 3 denote the bank and the last 3 denotes the branch of the bank. For example – If 110239103 is the MICR code then, 110 is the city code, 239 is the Bank code and 103 is the branch code.  

IFSC, on the other hand, stands for Indian Finance System Code. It is an alphanumeric code that is used to identify a bank’s branch. This code is used for processing electronic payments such as RTGS, NEFT and CFMS. When you transfer funds to someone’s account, you will be asked to enter the IFSC code. This code will help your bank in identifying the receiver’s bank branch the amount will then be directly credit to his/her account.

IFSC code consists of 11 characters, of which the first 4 are alphabets that help in identifying the bank and the last 6 digits tell the branch code. The 5th character is a 0 (zero) and has been reserved for use in the future. For example – If HDFC0000456 is the IFSC code, then HDFC is the bank name, 0 is the 5th character and 000456 is the branch code.

Both IFSC and MICR codes have been introduced to make the payment modes such as cheque payments, RTGS and NEFT secure, efficient and quick. One can easily find these codes on the bank websites or on other online financial platforms such as BankBazaar. To find the code, people just have to know their bank name and branch name.