11 January, 2024
SWIFT codes are created to make the transfer of funds and, in certain instances, messages among banks located in various regions of the world smooth and efficient. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. This code is segmented into different parts, each serving to convey distinct details about the bank and its geographical location.
In India, when you want to transfer money from one domestic bank to another, having the IFSC codes of both banks is essential. IFSC, which stands for Indian Financial System Code, is a crucial requirement regardless of which payment systems, such as RTGS, NEFT or IMPS.
Are IFSC and SWIFT code the same?
Many individuals may wonder if SWIFT code and IFSC code are the same. Below listed are some of the key differences between IFSC and SWIFT code
Usage
SWIFT codes are a universal tool utilised by banks and financial institutions across the globe to recognise recipient banks and streamline international transfers.
IFSC codes are specific to the Indian banking system and serve the purpose of identifying individual branches for domestic fund transfers.
Purpose
The primary function of a SWIFT code is to serve as a crucial instrument in expediting secure international money transfers. It plays a pivotal role in guaranteeing the precise routing of funds as they traverse various countries and financial institutions.
The IFSC code is designed to cater specifically to the needs of domestic fund transfers within the boundaries of the Indian banking system.
Regulatory authority
The SWIFT code system is overseen by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT is a global co-operation that provides a secure network for financial institutions to exchange information and funds.
The Reserve Bank of India (RBI) is the governing body responsible for assigning and regulating IFSC codes in India.
Accessibility
SWIFT codes are typically not readily accessible to the general public. They are often provided by the recipient bank when initiating international transfers, and you may need to request this information from your bank.
IFSC codes are publicly available and can be found on a bank's website, on cheques, or by contacting the bank directly. This accessibility simplifies the process making domestic transactions for individuals.
Precision
Accuracy is highly critical when dealing with SWIFT codes in international transactions. Any mistake can lead to funds being sent to the wrong destination, causing delays and potential complications.
Precision and accuracy in entering the IFSC code is important for domestic transactions to avoid any misdirection of funds. A single incorrect digit can result in a failed or delayed transfer.
Currency
SWIFT codes are instrumental in converting and transferring funds in multiple currencies, making them ideal for international trade, investments, and global business operations.
IFSC codes are used for transactions denominated in Indian Rupees (INR) since they pertain exclusively to the Indian banking system.
Settlement time
International transactions involving SWIFT codes may have longer settlement times, which can vary depending on factors such as currency conversion and international time zones.
Domestic transactions using IFSC Codes normally have shorter settlement times and are processed on the same day or within a few hours.
Bottom line
Understanding the differences between IFSC and SWIFT codes is essential for anyone engaging in financial transactions, whether they are domestic or international in scope. Proper usage of the IFSC and SWIFT codes is critical to avoid errors and delays in fund transfers and to maintain the integrity of the financial system.
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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances.
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