- > IFSC (Indian Financial System Code):
i. Indian Financial
System Code is an alpha-numeric code that uniquely identifies a bank-branch
participating in the NEFT system.
ii. This is an 11
digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero).and the last 6
characters representing the bank branch.
iii. IFSC is used by
the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately
to the concerned banks / branches.
For ex: SBIN0015986 :
i. First 4 character SBIN – refers to State Bank of India. ii. 0 is a control number.
iii. last six
characters (015986) represents the SBI branch Jail Road, Hari Nagar New Delhi.
- > MICR (Magnetic Ink Character Recognition): MICR
stands for Magnetic Ink Character
Recognition. MICR Code is a 9 numeric digit code which uniquely identifies a
bank branch participating in the ECS Credit scheme. MICR code consists of 9
digits e.g 400229128
i. First 3 digits represent the city (400)
ii. Next 3 digits represent the bank (229)
iii. Last 3 digits
represent the branch (128)
Note: The MICR Code
allotted to a bank branch is printed on the MICR band of cheque leaves issued
by bank branches.
- > Cheque Truncation:
i. Truncation is the
process of stopping the flow of the physical cheque issued by a drawer at some
point with the presenting bank en-route to the drawee bank branch.
ii. In its place an
electronic image of the cheque is transmitted to the drawee branch by the
clearing house, along with relevant information like data on the MICR band,
date of presentation, presenting bank, etc.
iii. Cheque
Truncation speeds up the process of collection of cheques resulting in better
service to customers, reduces the scope for clearing-related frauds or loss of
instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related
and logistics-related problems, thus benefitting the system as a whole.
- > Bancassurance: The sale of insurance and
other similar products through a bank. This can help the consumer in some situations;
for example, when a bank requires life insurance for those receiving a mortgage
loan the consumer
could purchase the
insurance directly from the bank.