Indian Financial System Code (IFSC)
The IFSC is an 11-character alpha-numeric code given by the Reserve Bank of India (RBI) to all the banks and their branches. The first four letters of the alphanumeric represent the bank, the next digit is 0, this is called the Control Number, for now, it is set to 0 and can change in the future. The last 6 digits are the branch code, this can be either numeric or alphabetical in nature, it is usually numeric.
Why is there a need for IFSC?
IFSC provides a unique identifier to each bank and bank branch, this allows the RBI to keep a track of all transactions taking place easily. IFSC is used for fund transfers by routing messages to a specific branch of a bank. The IFSC can also be used to authenticate transactions between bank branches. The National Electronic Funds Transfer (NEFT) and the Real Time Gross Settlement (RTGS) systems rely on IFSC to a certain extent to authenticate transactions.
Features of IFSC
Time Saving for End User
With the advent of the internet, most banking systems have gone online. A person no longer needs to go stand in long queues to perform simple transactions like fund transfers. The IFSC has made the Fund Transfer system even smoother and faster, as it has become easy to authenticate transactions in a few seconds.
Secure for Banks
IFSC has added a layer of authentication to all transactions. This extra layer of authentication has drastically reduced errors is transactions. The IFSC has also made it easier to reverse incorrect transactions as the money is easier to track.
As the IFSC allows banks to keep close track of the starting and ending points of transactions taking place through them, by providing each bank and bank branch with a unique identifier. This ability to closely monitor all transactions makes it much harder to commit fraud within a banking system.
Boon for Fintech Industry
The IFSC has allowed new Fintech companies to develop software to provide their users with a variety of online services. Applications from almost every corner of the Fintech industry use IFSC at some point to authenticate transactions. The IFSC has allowed Fintech companies to develop apps for online bill payments, online transfers between users, purchases, sales and lots more.