Benefits of MICR code on cheque

Every cheque in your book has a magnetic ink code bar at the bottom. This is a one-of-a-kind ink code written in a specialised language that bankers can only decipher. This ink code serves a far more practical purpose than an aesthetic one. It is referred to as the MICR code and plays an important part in the transactions that take place in banks.

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What exactly is MICR code?

MICR refers to magnetic ink character recognition. Located at the cheque’s bottom, this nine-digit number helps verify its authenticity. Checks are processed more quickly with the help of MICR. In addition, MICR also has the following features:

• It is printed at the very bottom of the cheque.
• It includes information about the bank, including the bank code, the account details, the cheque number, and the amount.
• The letters and numbers make up a MICR code.
• When sending money internationally, the MICR code will always be recognised, unlike the IFSC code.
• Magnetic ink character recognition codes are uncopyable because they employ proprietary fonts and ink.
• Each bank in India uses its own unique MICR code.

Why is MICR code used?

Inaccuracies may occur due to delays caused by manually processing cheques or human mistakes. In response, the RBI took matters into its own hands and devised this special nine-digit number. This 9-digit number is noteworthy because it can be read by machines, drastically reducing the likelihood of human mistakes.

The financial system’s precision and efficiency have both been improved because of this strategy. When completing paperwork for financial transactions like SIP and others, MICR codes may also be required. In addition, RBI’s MICR code has helped streamline the clearing procedure and cut down on unnecessary paper use. As an added bonus, the MICR code has drastically shortened the time it takes to process a cheque.

What is the MICR code format?

Financial institutions that are members of the Electronic Clearing System are given a MICR number to distinguish themselves from other institutions. It’s a 9-digit code representing the following data:

• The first three numbers represent the city code.
• Three numbers in the centre position denote a bank code.
• The branch code is the last three numbers.

3 ways to locate MICR code

The list of methods that are listed below will make it simple for you to locate the MICR code that corresponds to the branch of your bank.

• Cheque book

The MICR code will be conveniently located at the bottom of your cheque book or passbook. Be aware that the MICR code is shown right next to the cheque number, which is a six-digit number. Your bank account book’s initial page also has a MICR code.

• RBI website

The official website of the RBI is another resource you may use to verify your MICR code. In addition, you won’t have any trouble locating the MICR code for any of the Indian bank locations.

• Third-party websites

Lastly, you may verify your MICR code using other sources. In addition, there are a few questions that must be answered before you may go further. The name of the bank, its location, district, and branch are all included. In addition, you must complete the fields after selecting the appropriate options from the menus provided. The MICR code for your bank’s branch will appear when you provide all of the required information.

How does the MICR line function?

As magnetic ink is used to print MICR codes, duplicates are more difficult to produce. Cheque numbers, bank details, and routing numbers are just some examples of numbers and information that may be read, recorded, and decoded by computers due to MICR lines.

Bank stamps, cancellation markings, signatures, and other forms of spots or inks can’t hide the characters that magnetic ink has written, so a computer can read them even when they’re covered.

MICR code: Benefits 

The MICR Code has several benefits, some of which are listed below.

• Even after being handled roughly, the information contained in MICR can be deciphered with high precision.
• It would be tough to falsify the paperwork.
• The information from MICR may be processed quite fast.
• Errors are less likely to occur when there is no need for human input.
• It is possible to read the characters even if someone has written on them. This is because the lettering is printed using special ink that contains iron particles, which accounts for this phenomenon.
• Because printed texts cannot be altered, it offers a higher level of security than optical character recognition technology.

 

Micro codes ensure accuracy of cheque details

MICR characters can be read through stamps, signatures and other marks. This is due to the special ink used for printing the characters, thus ensuring the accuracy of the cheque details. It reduces the chances of human errors and ensures faster transactions, which cannot be possible in manual processing.

 

Micro codes on cheques deter counterfeiters

MICR is secure compared to optical character recognition as the printed characters cannot be changed. So, it eliminates even the slightest possibility of the documents getting forged. It uses magnetic ink and unique MICR fonts. Thus, even if someone changes the name of the payer in the cheque, the MICR number still displays the correct owner of the account. Moreover, if one attempts to photocopy the cheque, the MICR reader will not detect the magnetic link.

 

MICR code: Limitations

The limitations of the MICR Code are shown below.

• It can only distinguish 10 different numerical values and four special characters.
• The Magnetic Ink Character Reader (MICR) does not read alphanumeric characters. Readability is restricted to a certain number of characters only.
• The process of inputting data using this method is more costly.

FAQs

What does MICR stand for?

MICR refers to Magnetic Ink Character Recognition. This information, which includes the bank's address and any branches it may have, is printed at the cheque's bottom.

Where can I locate the MICR code for my bank?

You'll see the MICR code that corresponds to your bank at the very bottom of the cheque. Additionally, it may be accessed on the Reserve Bank of India website.

How many characters may a MICR code contain?

A MICR code is a nine-digit code, the first three digits of which reflect the city code, the next three elements comprise the bank code, and the final three characters indicate the bank's branch code.

Is the MICR code one-of-a-kind?

Yes, every single bank has its very own MICR code.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com