MICR,IFSC,NEFT, RTGS- Banks Codes

Many of us have been come across Jazz words from various financial institutions like MICR, IFSC, NEFT, RTGS. The banking community is trying to convert us into savvy online account holders. You can see your cheque book and Look for these:

MICR No: Magnetic Ink Character Recognition People in the finance industry tend to say ‘What’s your maika no.- the nine digit number that appears after your cheque no. Decoded, the first three digits represent the city that your account is in. The next three digits represent your bank and the last three indicate the branch of that bank.

IFSC Code: Indian Financial System Code . This is used inter-changeably with the NEFT code. It is made up of 11 alpha-numeric characters and, on the new cheque books, is printed on the face of your cheque. The first four are usually alpha and you should be able to spot the name of your bank in it. For example, MAHB would stand for Bank of Maharashtra. The fifth character is usually a ‘0’. The last six numerals represent the bank branch details.

Snapshot 1
Understand how the system works, so that if you ever need to track some missing money, you know your way around. In the past, if a cheque got lost, most of us called the bank to cancel it, got a new one and informed the issuer. All we needed was the cheque number. So, what do you do when everything is happening in cyberspace?

NEFT :Very simply, banks now use electronic platforms to transfer money to you instead of cheques. For smaller amounts, usually less than a lakh, they use NEFT (National Electronic Fund Transfer). If a fund house has declared a dividend, it gives its bank the list of investors along with their IFSC/MICR codes. The bank prepares and sends a message to the local RBI cell which sorts all the transactions in received and then forwards them on to the respective banks. (A bit like how the post office sorts out your letters based on the pin code.) Voila. Your account gets credited.

RTGS:For larger chunks of money, where the amount is over a lakh, banks also use another electronic platform where speed is of essence. This is called RTGS (Real Time Gross Settlement). The main difference is that it gets processed immediately.

Some helpful hints
Unlike cheques which have unique cheque nos, NEFT transactions are bulk transactions – which means that there is no unique number for you. So, if you need to track your money, first check that the bank sending the money has the correct bank account no, that the name matches and of course the IFSC/MICR nos are ok. If so, then ask them to check for bounced NEFT instructions in their system.

IF the transaction was done via RTGS, tracking is easier, but you still have to go back to the fund house and get your unique transaction no. before your bank can help you.