You need to ensure that you enter the right account number but also the correct Indian Financial System Code (IFSC) while transferring money online through your bank account. Every bank branch has their own IFSC code.
You first need to register the person’s bank account to whom you want to transfer money under the list of payees or beneficiaries to your bank account to make online fund transfer using National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS) or Immediate Payment Service (IMPS). To register the beneficiary, you need to give details, including the beneficiary’s name, bank name, account number and IFSC.
It is mandatory to add the payee’s name while making an online fund transfer. Some banks match the beneficiary’s name as a precautionary measure to ensure fund transfer happens to the correct account, but it’s not mandatory for banks to do so, according to Reserve Bank of India (RBI)'s regulations.
Here is what happens if you enter wrong IFSC code.
What is IFSC code?
To identify each branch of every bank in India, an 11-digit alphanumeric unique code that is used is known as IFSC. Usually, the first four characters of the code stand for the bank, the fifth is always a “0", and the last six digits represent the branch code.
For example, SBIN0007483 is an IFSC code one of the branches of State Bank of India (SBI) uses. The first four characters, SBIN, stand for the bank’s name, while the last six digits (40278) represent the branch of SBI.
RBI identifies the beneficiary’s bank to which the transfer has to be made using IFSC.
If IFSC code is entered wrongly?
There are less chances of a mistake as most of the banks ask customers to choose the name of the bank and the name of the branch from a dropdown to get the IFSC code, but banks also give the option to write the IFSC code.
Following are the two scenarios in case wrong IFSC code is entered:
- If you have selected IFSC of a different branch then, for eg: You have to transfer funds to the Andheri branch of SBI but you selected the IFSC code of the Bandra branch then, the money transfer will most likely happen, provided other details you enter are correct.
- If you have selected the IFSC of a different bank then, for eg: You had to transfer money to an HDFC Bank account but you chose the IFSC of Axis Bank (the chances of something like this are low). In this case, whether or not the fund transfer happens will depend on whether Axis Bank has an account with a matching account number.
The chances of two banks having the same account number are rare but not impossible.
It is usually very difficult to get the money back or reverse the transaction once the money is credited into the wrong bank account. Online transfer of money is an easy and convenient mode of transaction but you have to be careful that no error is done and ensure money transferred by you is to the right bank and right branch.