Difference Between SWIFT code and IFSC code

Difference Between SWIFT code and IFSC code
SWIFT Code and IFSC Code

In banking, the terms IFSC Code and Swift Code are used in common parlance, but they are differing in their use and the institutions who issue them.

The Basic Difference between the two

The basic difference between a SWIFT code and an IFSC code lies in their scope of utility for money transmission. You must be aware that an IFSC code is required for those who want to make all types of banking transactions digitally, with the exception of UPI-based payments. Now SWIFT codes work essentially the same as IFSC codes do, with the exception that the former is used when an individual has to transmit money to others who live outside a nation’s boundaries. It means a SWIFT code is used for international money transfers between banks. But an IFSC code is used for the transfer of funds within the country. Let’s look at some other of their features.

SWIFT Code

What is a SWIFT Code?

A SWIFT code, often known as a SWIFT number, is a standard format for Business Identifier Codes (BIC). It is used to identify banking affiliations and financial institutions all around the globe. It tells you who they are and where their territory is — sort of like an international bank code or ID number for a bank.

This code is issued to a particular bank by the Society for Worldwide Interbank Financial Telecommunications.

Why is it used?

A SWIFT code is commonly used for fund transfers between banks, most particularly for international wire transfers and payments. It allows for the simple and quick transfer of funds from a bank account in one nation to one in another. Banks also utilize these codes to communicate with one another and send messages to each other.

You may be needed to specify a SWIFT code if you are sending or receiving money overseas between banks, especially for international wire transfers or payments. SWIFT codes assist banks in processing international transactions.

Its denomination

A SWIFT code is 8-11 characters long that signifies your country, city, bank, and branch. It is denominated like this:

AAAABBCC123, wherein      

AAAABBCC123
Bank codeCountry codeLocation codeBranch code

Bank code – First 4 alphabets represent your bank’s name.

Country code – Next 2 alphabets represent the country where the bank is.

Location code – Next 2 characters may be made up of alphabets or digits. It denotes the location of the bank’s head office.

Branch code – Last 3 digits (or can be letters too) denote a particular branch of the bank. These are optional, though.

Where to find it?

You can normally find the SWIFT code of your bank in the bank account statements. Otherwise, you may also contact the bank or visit its official website to check the SWIFT code.

IFSC Code

What is an IFSC Code?

The Indian Financial System Code (abbreviated as IFSC), is a unique 11-digit alphanumeric code that is used for online fund transfer transactions made through NEFT, RTGS, and IMPS. The Reserve Bank of India (RBI) is in charge of assigning IFSC codes to banks. It is unique for each branch and bank.

Why is it used?

An IFSC code is used for all electronic payment options such as NEFT, RTGS, and IMPS. It helps to specifically identify a bank branch and eliminate errors in the process of fund transfer.

If you are transferring money within the country using online banking, the IFSC code must be supplied in order for the transfer to be initiated. Banks do not amend or update the IFSC code unless there is a merger.

When initiating a financial transfer to a specified payee, the account number and branch-specific IFSC code must be provided. Once the remitter gives these details, the funds are transferred to the account holder in a short span of time, and the IFSC aids in the avoidance of mistakes in such transactions. Essentially, an IFSC Code aids in ensuring that the correct payee receives the payments that they are entitled to.

Its denomination

An 11-digit alphanumeric IFSC code typically looks like this: 

ABCD0123456, wherein     

A B C D01 2 3 4 5 6
Code for Bank name0Code for Branch Name

Code for Bank name – The first 4 letters represent the name of the bank. This part will be the same for all branches of the same bank.

0 – Next, it is 0

Code for Branch Name – The next 6 digits represent the code of the particular branch. This is what sets the IFSC code for each bank branch distinct and unique.

Where to find it?

You can get the IFSC code of your bank on the cheque leaf that is provided by the bank. Aside from the cheque leaf, the IFSC code may also be found on the bank’s and the RBI’s official websites. Moreover, the code may also be found on the account holder’s pass-book.

Takeaway

Now that we have seen how SWIFT codes and IFSC codes differ from each other, the table below will briefly warp up the discussion:

SWIFT CodeIFSC Code
Transfer of funds across the globeTransfer of funds in India
Can be 8-11 characters longAre 11 characters long
Assigned to a bank by the Society for Worldwide Interbank Financial TelecommunicationsAssigned to a bank by the Reserve Bank of India
Fictitious Example for Allahabad Bank, Chandigarh: ALLAINBBCHDFictitious Example for State Bank of India: SBIN0005943
Can be found in bank account statementsCan be found on cheque-book, pass-book, or RBI’s website
The last 3 characters represent the branch of the bankThe last 6 characters represent the branch of the bank
Difference between SWIFT Code and IFSC Code

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Ruchi Gandhi

The author enjoys to write informational content in the domain of company law and allied laws. She takes interest in doing thorough and analytical research on legal topics. She is a CA along with MBA (Fin) and M. Com.

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