What is MICR ???

What is MICR?

Many of you would have seen the magnetic inks bar codes printed on the bottom of your bank’s cheque leaves. These bar codes are known as MICR code, an abbreviation for ‘Magnetic Ink Character Recognition’. Actually, the MICR is the name given to the technology used in printing the code. In India in 1980 this unique system of MICR based cheque clearing system was introduced first time. Apart from being a security bar code to protect your transaction, the MICR code is also an indispensable part for online money transfers. Every bank branch is given a unique MICR code and this helps the RBI to identify the bank branch and speed up the clearing process.

What does it comprise?

MICR code consist of 9 digit

First three digit (1-3) denotes city and are same/identical first three digit of your pin code for example first three digit of Pin code of  New Delhi =110 so first three digit of MICR code of all the bank branches located in New Delhi must be 110.
4-6 digit denotes for Bank
each bank has given a three digit code,4-6 digit is= bank code eg. SBI code is “002”so 4-6 digit of MICR code all the the branches of SBI is “002” irrespective of location in the india.
(7-9)Last three digit denotes branch code,it is in serial wise ,means if delhi has only one branch of SBI and its MICR code will be
Example : In case of  “110002001”  110(FOR CITY)…..002(FOR BANK)……..001(FOR BRANCH)
You can check the MICR codes of different banks and its branches by checking it out on the RBI website.

How does MICR help speed up the processing of cheques?

Unlike the manual clearing of cheques where there is a possibility of many human errors and subsequent delay in clearing, the MICR code on the cheque printed with a unique magnetic ink usually iron oxide has magnetic material present in it and thus makes it machine-readable and almost error proof!The MICR code is so clear and fine that the machine could read it even if the MICR code isn’t visible due to other marks or stamps on it.

According to the Reserve Bank of India report (Payments in India: Vision 2009-2012), all bank branches will be enabled with MICR codes. Also, the RBI intends to reduce paper-based clearing process by introducing MICR- Cheque Processing Centres that will process over 95 per cent of volume and value of cheques processed in the country. All countries have their own standards for these numbers like in USA standards are defined by ANSI(American National Standards Institute).

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