Bank IFSC Code (RTGS, NEFT) Explained

IFSC code is needed to transfer funds to any bank from your account using RTGS/NEFT facility. IFSC, These codes help to identify a branch of bank to whose account fund is required to be transferred. It is a unique code that is assigned to every branch of every bank in India.

Before explaining these codes further let us first know what exactly is the full form of these abbreviations. Here we go -

IFSC - Indian Financial System Code.

RTGS - Real Time Gross Settlement.

NEFT - National Electronic Fund Transfer.

Relation Between Bank IFSC Code, RTGS & NEFT Fund Transfers

While doing inter bank electronic fund transfer (usually for payment of availing some service), using online banking, a user (i.e. bank's customer) can deposit amount into service provider's bank account using 'payments and transfers' option available on your online bank account's dashboard. The transaction can be of two types - 1) RTGS 2) NEFT, and customer can choose any 1 option. It doesn't matter which option is chosen, the bank will imply a service charge for sending money to a 'beneficiary' (a beneficiary is a service provider added to 'approved beneficiaries' list in remitter's online bank profile) holding an account in some other bank.

So which method to choose for transferring bank funds? Since both these systems are maintained by RBI (Reserve Bank of India) - most people are confused about it, but here are guidelines which will make it clear to you on choosing the right option.

1) Do you want fast transfer/processing of funds?

If your answer is 'yes', then use RTGS instead of NEFT. An RTGS transaction will be credited to your beneficiary's account on the same day, provided your transaction is posted before the bank specified business hours. Here the processing of fund transfer instructions takes place as they are received (in real time). The settlement of funds transfer instructions occurs individually on an instruction by instruction basis (hence, gross settlement).

It is not that NEFT is slow. In fact the transactions will be processed maximum within the next working day depending on the settlement time. What makes it a little slower than NEFT is the way system of transfer of funds operates. Unlike RTGS, where transaction settlement happens continuously (individual settlements), the NEFT system of fund transfer operates on a Deferred Net Settlement basis. Fund transfer transactions are settled in batches.

 2)Do you want to transfer amount below Rs 2,00,00.00 (i.e. Rs. 2 lakh)?

If your answer is 'yes' (again) you must choose NEFT. This is because there is limit on minimum transaction amount that can be transferred using RTGS (which is, you guessed it right, INR 2 Lakhs). Upper limit for both types of inter bank transactions is Rs. 5 Lakhs in case of retail banking. The limits in case of 'Corporate Banking' is different though, and it varies depending on the the bank and it's policies. As of now, in case of SBI, for example, the limits are - RTGS (min. Rs. 2 Lakhs , max. 50 lakhs - 500 crores), NEFT(no minimum limit, maximum is same as in case of RTGS).

Also note that there is a proper schedule laid down by Reserve Bank of India which is strictly followed while transferring your money on the basis of chosen option. The schedule vary a lot depending upon if it is a normal weekday, or it is a weekend (Saturday and Sunday), or it is a national holiday. The details about the timing and scheduling of inter-bank transfer can be obtained from your bank's website.

It doesn't matter which online banking (SBI, Axis, ICICI, HDFC) service you use, you can rely on above information for transferring you funds.

But this article is supposed to be explaining about Indian Financial System Code, and thus far we have talked more about RTGS and NEFT, let's come back to topic.

So how does IFSC code fit into the scheme of inter-bank transfer of money from your account to someone else's account. What role does IFSC codes play in bank transfers, why are they needed, and from where one can get them?

These codes play a very vital role, let's make it very clear. Without grabbing an IFSC code for a particular bank's branch (where beneficiary account is maintained) you won't be able to make a transfer using any of the above mentioned method's/system's. Have a look at the mandatory information that is required to effect a RTGS & NEFT payment -

1. Amount to be remitted.
2. Account number which is to be debited.
3. Name of beneficiary bank, beneficiary, and the account number to which money is to be transferred.
4. 'Sender to receiver information' - which is an instruction that is printed in bank book's when transaction is made and is visible in list of transactions when you look at it in your online bank account past transactions or latest transactions list.
5. IFSC Code.

As you can see from above list (note - point number 5) the IFSC is must. 

Now the next question which immediately pops up is - "From Where To Get The Requisite Bank IFSC Code?"

How to Get IFSC Code

Look at following places to get the IFSC code of  a particular bank's branch

• Locate it on Bank's Cheque Book - RBI has instructed every bank in India to ask their branches to print IFSC code. It is easy to locate it. In most cases the financial system code is printed just above the MICR band on the cheque's right above the serial number of the cheque.
• Call Your Branch - Just pick up a phone and make a call to customer care executive or bank's call center. They will tell you the particular branch code within second or two.
• From RBI website- Not all branches have NEFT/RTGS facility available, and as such there is no branch code. The list of such bank's or branches which do have a code can be downloaded by using following links - RTGS ( http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/RTGEB1110.xls), NEFT(http://www.rbi.org.in/scripts/neft.aspx ). These links are also good for knowing more about Indian Financial System Code and relates information.

I hope this article has helped you a lot and you can do us a favor by sharing it with your friends.