The first thing that I will deal with is something that is related to cheques. When we make online payments or transfer of money, there are some numbers that are required for one bank to recognize the other. Most of them are present on your cheque. Here is a lowdown on chequebook and some banking jargon:
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Cheque Number: The first six digits on your cheque are your cheque number. We all know that – don’t we?
MICR: There are 2 types of cheque books - MICR and Non-MICR.MICR is the cheque book containing MICR code, which makes it possible to process electronic clearance.
The first time I heard MICR I felt I was a retarded bum since the people from the bank were confident enough to show me that it was something I was supposed to know. Anyway after an awkward moment of self depreciation, I was told that it meant Magnetic ink character recognition – Ha! Like that made any difference. Why don’t I just dig a hole and let them kick me on my derriere into it? So, I let it go that time and decided to do some research and get myself prepared to speak with them.
So here’s what it is - MICR comprises of the nine digits that are present on your cheque after the cheque number. It’s like a pin/zip code or numerical address for your bank. Of those 9 digits, the first three digits specify the city in which you have a bank account (City code), the next three digits of MICR specify your bank in that particular city (Bank code), the last three digits of MICR help locating the specific branch of the specific bank (Branch code).
The nine-digit code is called MICR because it is printed with magnetic ink, which is usually made of iron oxide. Magnetic ink is used so that numbers are readable even if it is stamped over.
A/c with RBI: This is something I learnt thanks to an article by Teena Jain on Mint Lounge. The third numerical block represents your account (A/c) number maintained by the Reserve Bank of India (RBI). The number helps in cheque processing when it goes to RBI for clearance. This number doesn’t come in common use as no one really asks for it but it feels good to know what it is.
Transaction code: The last two digits at the bottom of the cheque again is something that is only for banking official conversation. It helps them decode whether the cheque is current A/c, saving A/c, at par, multicity, intra-city cheque. It helps in processing an intra-city cheque as a local one with a faster turnaround time.
RTGS code: This is something that your employer might require if they are transferring money directly to your account. This too is present on a MICR cheque. It is the same as IFS code mentioned on the cheque. RTGS is an application used by RBI and this application uses the IFS code for identification of banks.
IFSC stands for Indian Financial System Code. It’s a code used for all sort of electronic money transfer purpose. The code gives a specific identification figure to the branches of the banks and hence eliminates any chaos as its a unique for every branch, be it in the same or different city.
The code consists of 11 Characters - First 4 characters represent the entity (e.g., UTIB for Axis Bank or ABNA for ABN Amro bank), the fifth position has been defaulted with a '0' (Zero) for future use; and the Last 6 character denotes the branch identity.
Before you shoot that question about at par and multicity, I have my answer guns loaded:
Cheques are mainly of three types:
a) Ordinary cheques are paid at the local branches of the Bank where it has been deposited.
b) At Par cheques are paid at any branches of the bank, wherever it may be deposited.
c) Banker's cheques are issued in lieu of Demand Drafts on the other banks only and issued in favour of Government generally.
Multi City Cheques are special series cheques issued by the banks customer to their clients. The cheques will be payable at par, like local cheques, in the Multi City Cheque centres of the Bank. There would be a notation on top of the cheque as "MULTI-CITY CHEQUE". Similarly, the bottom of the cheque may contain the statement "Payable at par at identified branches at centers listed except the centre of issue". Intra city denotes within the same city.
The next thing that was puzzling for me in my initial days of banking was the difference between an Ordinary and an A/C Payee Cheque
So, here’s what it is - Cheques can also be classified as Ordinary and Crossed.
a) Ordinary/ Bearer’s cheque can be paid by the bank to whosoever mentioned on the cheque. The risk that sticks to this type of cheque is that anyone can pose as the drawer if they bear the cheque and sign with the name mentioned since this process does not require a presence of bank account and the payment by the bank is in cash. This is also used as a tax evading mechanism by a few.
b) Crossed cheques are paid only to the particular person/company mentioned on the cheque and it is paid through bank account only. No cash will be paid directly to the customer.
Crossings are of many types:
• Simple Crossing : Two parallel lines are drawn on the left corner of the cheque. It indicates that the amount to be paid through Bank account only
• Account Payee: Two parallel lines are drawn on the left corner of the cheque and the words 'Account payee only' written between the lines. It indicates the payment to the particular person only through bank account.
• & Co: Two parallel lines are drawn on the left corner of the cheque and the words '& Co' written between the lines. It is the indication for the payment to anyone of the group persons in the bank account
MICR: There are 2 types of cheque books - MICR and Non-MICR.MICR is the cheque book containing MICR code, which makes it possible to process electronic clearance.
The first time I heard MICR I felt I was a retarded bum since the people from the bank were confident enough to show me that it was something I was supposed to know. Anyway after an awkward moment of self depreciation, I was told that it meant Magnetic ink character recognition – Ha! Like that made any difference. Why don’t I just dig a hole and let them kick me on my derriere into it? So, I let it go that time and decided to do some research and get myself prepared to speak with them.
So here’s what it is - MICR comprises of the nine digits that are present on your cheque after the cheque number. It’s like a pin/zip code or numerical address for your bank. Of those 9 digits, the first three digits specify the city in which you have a bank account (City code), the next three digits of MICR specify your bank in that particular city (Bank code), the last three digits of MICR help locating the specific branch of the specific bank (Branch code).
The nine-digit code is called MICR because it is printed with magnetic ink, which is usually made of iron oxide. Magnetic ink is used so that numbers are readable even if it is stamped over.
A/c with RBI: This is something I learnt thanks to an article by Teena Jain on Mint Lounge. The third numerical block represents your account (A/c) number maintained by the Reserve Bank of India (RBI). The number helps in cheque processing when it goes to RBI for clearance. This number doesn’t come in common use as no one really asks for it but it feels good to know what it is.
Transaction code: The last two digits at the bottom of the cheque again is something that is only for banking official conversation. It helps them decode whether the cheque is current A/c, saving A/c, at par, multicity, intra-city cheque. It helps in processing an intra-city cheque as a local one with a faster turnaround time.
RTGS code: This is something that your employer might require if they are transferring money directly to your account. This too is present on a MICR cheque. It is the same as IFS code mentioned on the cheque. RTGS is an application used by RBI and this application uses the IFS code for identification of banks.
IFSC stands for Indian Financial System Code. It’s a code used for all sort of electronic money transfer purpose. The code gives a specific identification figure to the branches of the banks and hence eliminates any chaos as its a unique for every branch, be it in the same or different city.
The code consists of 11 Characters - First 4 characters represent the entity (e.g., UTIB for Axis Bank or ABNA for ABN Amro bank), the fifth position has been defaulted with a '0' (Zero) for future use; and the Last 6 character denotes the branch identity.
Before you shoot that question about at par and multicity, I have my answer guns loaded:
Cheques are mainly of three types:
a) Ordinary cheques are paid at the local branches of the Bank where it has been deposited.
b) At Par cheques are paid at any branches of the bank, wherever it may be deposited.
c) Banker's cheques are issued in lieu of Demand Drafts on the other banks only and issued in favour of Government generally.
Multi City Cheques are special series cheques issued by the banks customer to their clients. The cheques will be payable at par, like local cheques, in the Multi City Cheque centres of the Bank. There would be a notation on top of the cheque as "MULTI-CITY CHEQUE". Similarly, the bottom of the cheque may contain the statement "Payable at par at identified branches at centers listed except the centre of issue". Intra city denotes within the same city.
The next thing that was puzzling for me in my initial days of banking was the difference between an Ordinary and an A/C Payee Cheque
So, here’s what it is - Cheques can also be classified as Ordinary and Crossed.
a) Ordinary/ Bearer’s cheque can be paid by the bank to whosoever mentioned on the cheque. The risk that sticks to this type of cheque is that anyone can pose as the drawer if they bear the cheque and sign with the name mentioned since this process does not require a presence of bank account and the payment by the bank is in cash. This is also used as a tax evading mechanism by a few.
b) Crossed cheques are paid only to the particular person/company mentioned on the cheque and it is paid through bank account only. No cash will be paid directly to the customer.
Crossings are of many types:
• Simple Crossing : Two parallel lines are drawn on the left corner of the cheque. It indicates that the amount to be paid through Bank account only
• Account Payee: Two parallel lines are drawn on the left corner of the cheque and the words 'Account payee only' written between the lines. It indicates the payment to the particular person only through bank account.
• & Co: Two parallel lines are drawn on the left corner of the cheque and the words '& Co' written between the lines. It is the indication for the payment to anyone of the group persons in the bank account
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