MICR What does it comprise?
The MICR code has nine digits in it with each three digits signifying some important information about the transaction and the bank. The first three digits in the MICR code represent the city code that is the city in which the bank branch is located.
In most cases it is in line with the PIN code of the postal addresses in India.
The next three digits stand for the bank code while the last three digits represent the bank branch code.
For example, if you have an account with State Bank of India (SBI) Mumbai (Central) then its nine digit MICR code will be 400002009 wherein:
400, the first three digits representing the city code for Mumbai;
002, the next three digits representing the bank code for SBI;
And 009, the last three digits representing the bank branch code for Andheri (West).
You can check the MICR codes of different banks and its branches by checking it out on the RBI website.
How does MICR help speed up the processing of cheques?
Unlike the manual clearing of cheques where there is a possibility of many human errors and subsequent delay in clearing, the MICR code on the cheque printed with a unique magnetic ink usually iron oxide has magnetic material present in it and thus makes it machine-readable and almost error proof!
Under this method the reading machine or a cheque sorting machine reads through a cheque when inserted and identifies the branch the cheque belongs to and activates the automation clearing process.
The MICR code is so clear and fine that the machine could read it even if the MICR code isn't visible due to other marks or stamps on it.
According to the Reserve Bank of India report (Payments in India: Vision 2009-2012), all bank branches will be enabled with MICR codes.
Also, the RBI intends to reduce paper-based clearing process by introducing MICR- Cheque Processing Centres that will process over 95 per cent of volume and value of cheques processed in the country.
FISC CODE.
The code is of 11 characters. The first part is the first 4 alphabet characters representing the Bank. Next character is 0(zero), this is reserved for future use. The branch code is the last six characters. To know what is IFSC Code deeply, go through the article fully. Otherwise, if you need IFSC Code of any branch, just follow the instructions below.
IFSC Code < Click Here
1. Select your Bank (eg : State Bank of India)
2. Select your State
3. Select your District
4. Select your Branch name – Now you can find IFSC Code, MICR Code, Address and Contact phone number of your bank branch.
1. The remitting bank will be send payment instruction to central processer’s technical operator
2. The central processor acknowledge stripping of message and sending original message with set of instructions (what the amount to be transferred, what is IFSC code of branch, issuing and receiving banks identification etc.) to central bank
3. The central bank process debit of remitting bank’s account and credit to beneficiary bank’s account. After transaction completed then, sending confirmation to central processor
4. The central processor re-constructing of payment message with stripped information (beneficiary details) and sending message to receiving bank with proper details
Basically RTGS fund transfer used for large amount of transaction, the minimum amount can be 2 lakhs. In NEFT system can allows to transfer small amount of funds, there is no minimum value.
The MICR code has nine digits in it with each three digits signifying some important information about the transaction and the bank. The first three digits in the MICR code represent the city code that is the city in which the bank branch is located.
In most cases it is in line with the PIN code of the postal addresses in India.
The next three digits stand for the bank code while the last three digits represent the bank branch code.
For example, if you have an account with State Bank of India (SBI) Mumbai (Central) then its nine digit MICR code will be 400002009 wherein:
400, the first three digits representing the city code for Mumbai;
002, the next three digits representing the bank code for SBI;
And 009, the last three digits representing the bank branch code for Andheri (West).
You can check the MICR codes of different banks and its branches by checking it out on the RBI website.
How does MICR help speed up the processing of cheques?
Unlike the manual clearing of cheques where there is a possibility of many human errors and subsequent delay in clearing, the MICR code on the cheque printed with a unique magnetic ink usually iron oxide has magnetic material present in it and thus makes it machine-readable and almost error proof!
Under this method the reading machine or a cheque sorting machine reads through a cheque when inserted and identifies the branch the cheque belongs to and activates the automation clearing process.
The MICR code is so clear and fine that the machine could read it even if the MICR code isn't visible due to other marks or stamps on it.
According to the Reserve Bank of India report (Payments in India: Vision 2009-2012), all bank branches will be enabled with MICR codes.
Also, the RBI intends to reduce paper-based clearing process by introducing MICR- Cheque Processing Centres that will process over 95 per cent of volume and value of cheques processed in the country.
FISC CODE.
Indian Financial System Code (IFSC)
IFSC Code brief explanation
IFSC Code is Indian Financial System Code, which is an eleven character code assigned by RBI to identify every bank branches uniquely, that are participating in NEFT system in India. This code is used by electronic payment system applications such as RTGS, ,National Electronic Fund Transfer and CFMS.The code is of 11 characters. The first part is the first 4 alphabet characters representing the Bank. Next character is 0(zero), this is reserved for future use. The branch code is the last six characters. To know what is IFSC Code deeply, go through the article fully. Otherwise, if you need IFSC Code of any branch, just follow the instructions below.
How to find IFSC code?
Normally, this 11 digit code will be printed on cheque book for NEFT enabled banks. Also, you can find bank IFSC code, bank details, branch address for all banks in India by following link. By using 4 steps you can easily find this code and branch location.IFSC Code < Click Here
1. Select your Bank (eg : State Bank of India)
2. Select your State
3. Select your District
4. Select your Branch name – Now you can find IFSC Code, MICR Code, Address and Contact phone number of your bank branch.
RTGS (Real Time Gross Settlement) brief explanation
RTGS (Real Time Gross Settlement) is a fund transfer system used to transfer money from one bank to another. This gross basis transfer is a real time transfer system. This system can performs for large value of transaction, minimum amount can be transferred is Rs.2,00,000. There is no maximum amount limit for this transaction.Time taken for transferring funds
The time taken for receiving funds to beneficiary account in real time when the remitting bank transferred funds. The remitting customer can receive acknowledgment from RBI when the funds transferred.RTGS process
Normally RBI allows to use four flow structure (V, Y, L, T) in fund transfer. In RTGS system, RBI decided to use Y shaped flow structure in this system. The following flows of instructions are used in this structure.1. The remitting bank will be send payment instruction to central processer’s technical operator
2. The central processor acknowledge stripping of message and sending original message with set of instructions (what the amount to be transferred, what is IFSC code of branch, issuing and receiving banks identification etc.) to central bank
3. The central bank process debit of remitting bank’s account and credit to beneficiary bank’s account. After transaction completed then, sending confirmation to central processor
4. The central processor re-constructing of payment message with stripped information (beneficiary details) and sending message to receiving bank with proper details
RTGS processing/service charges
| Transaction | Charges |
| Inward transactions | Free, no charges |
| Outward transactions
a] 2 lakhs to 5 lakhs b] Above 5 lakhs |
Not exceeding Rs.25 Not exceeding Rs.50 |
RTGS coverage
The RTGS payment system was launched on 26th, March 2004 by RBI with involving four banks only. Presently it covers 109 banks in 13750 branches and 508 clearing centers. More than 800 cities/towns are covered for customer transaction.NEFT (National Electronic Fund Transfer) brief explanation
NEFT (National Electronic Fund Transfer) is an online national-wide fund transfer system supported by RBI. It is used by an individual, firm and corporate to transfer payment as electronically. NEFT is used for small and medium amount transfer between banks and accounts. No minimum amount limit for NEFT.Time taken for transferring funds
NEFT process to transfer funds on hourly batches. In week days there are 11 settlements (starts at 9 A.M and ends at 7 P.M) and in Saturday there are 5 settlements (starts at 9 A.M ends at 1 P.M). Normally the payment will be send to the RBI within 3 hours when remitting account given request for transaction. The actual time to take transaction completed depends on beneficiary bank to process the funds.NEFT processing/service charges
From March 31, 2011 RBI refrain from insisting the processing/service charges to member banks. So, member banks who are participating in NEFT fund transfer no need to pay any charges to RBI. The following charges are rationalized under RBI.Beneficiary bank’s inward transaction:
No need to pay any charges from beneficiaries for payment transfer to destination accounts.Beneficiary bank’s outward transaction:
| Transaction | Charges (+service tax) |
| Below Rs.1 lakh | Rs.5 |
| Rs.1 lakh and up to Rs.2 lakhs | Rs.15 |
| Above 2lakhs | Rs.25 |
RTGS Vs NEFT
When compared to RTGS and NEFT, RTGS payment transfer system based on gross settlement and NEFT payment transfer system based on net settlement. Gross settlement is known as transaction held without bouncing other transaction on one-to-one basis.Net settlement is known as transaction completed in specific time of batches.Basically RTGS fund transfer used for large amount of transaction, the minimum amount can be 2 lakhs. In NEFT system can allows to transfer small amount of funds, there is no minimum value.
