The full form of MICR is Magnetic Ink Character Recognition. The bank industry primarily uses the MICR code (Magnetic Ink Character Recognition Code) pattern recognition technology to verify documents’ authenticity and facilitate the processing and approval of checks and other paperwork. It is a technology that makes use of particular characters and ink.
Characteristics of MICR code
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A MICR code, which has nine digits, is a unique identification of the bank and branch participating in an ECS (Electronic Clearing System). At the bottom of a check leaf, the MICR code is written next to the cheque number. Additionally, it is printed on the first page of a passbook for a bank savings account.
MICR code is composed of three parts:
- City code – The very first three digits represent the city. They match the PIN code we use in India for postal addresses.
- Bank code – The next three digits reflect a bank.
- Branch code – The last three figures indicate the branch.
Working of MICR method
In the document, the MICR code is shown in two different ways. CMC-7 is one, and E-13B is the other. The ink used in printing is called magnet ink. The characters that have been obscured by other marks, such as signatures and stamps, can be properly read thanks to the transfer of the MICR code from the MICR reader.
When filling out various financial transaction forms, such as investment or SIP forms, or when sending money, one should take note of the MICR code.
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Features of MICR code
- Even if there is any stamp or sign over it, it is easily recognizable. So it’s beneficial. It generates a very secure network as it is hard to track the same ink, which complicates forging the document.
- In this case, the error rate is low.
- MICR fonts that do not meet such criteria are either rejected or not approved.
Difference between the IFSC code and MICR code
The main difference between the two is the IFSC Code is used to remit money via NEFT and RTGS. MICR code, on the other hand, is used only on cheque leaves.