With Internet banking becoming such a growing phenomenon, banks need to increase the accuracy and security of such transactions. One of the ways to do this is by making details like the IFSC number of participating banks a mandatory prerequisite when making 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 such as HDFC0000485 is made up of three parts: the first four alphabetic characters identify the name of the bank, the fifth character is a ‘0’ that is kept as a buffer for future expansion, and the last six characters are those that represent the bank’s branch. Bank. address and are usually numeric, but can also be alphabetic.
IFSC is used when transferring funds electronically through services such as National Electronics Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), and Immediate Payment Service (IMPS). In order to successfully complete such a transaction, the payer must have the IFS Code of the beneficiary’s bank.
Benefits of the IFSC
• Save time and money:
The biggest advantage of online banking over conventional banking is that it saves time. You can skip the traffic, lines and formalities of conventional banking and complete your banking transaction within minutes at your comfort and convenience. IFSC facilitates such transactions online and saves you time. Additionally, 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.
• Shortest transfer time:
IFSC-enabled online banking also saves the time, effort and money required for conventional services, such as demand drafts and bank checks, to make the transfer of funds successful. In addition, the transaction is immediately reflected in the sender’s and beneficiary’s accounts, as the IFSC details are already confirmed. Also, apart from bank service charges (if any), no extra money is spent to make such a quick transaction.
• Safe and transparent:
For online banking, users must submit key credentials, including the beneficiary’s IFSC, which is then verified by the bank. Only after verification by the payer’s bank can a user make an IFSC-enabled funds transfer. This makes the process safe. Furthermore, as online banking by using IFSC removes the human interference factor from the financial transaction process, such banking becomes more transparent and accountable and reduces the possibility of any kind of scam that may be carried out in the system. Also, in online banking, since both sender and recipient of the account are informed of the transaction immediately via SMS or email, online banking is less susceptible to fraud or any loss.
• Aid in Bank Reconciliation:
IFS codes are unique to each participating bank branch, and this 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 in danger of making inaccurate transactions. Also, since all banks are now digitally enabled, the online funds transfers facilitated through IFSC help them quickly reconcile. In addition, the IFSC’s mandate for individual and corporate transactions helps banks disburse funds quickly and correctly. IFSC also makes it easier for banks to communicate and understand transactions between their branches and also with other banks.