IFSC ( Indian Financial System Code )

RBI statistics show that Investors are increasing using NEFT and RTGS for funds transfers .

Even companies and Mutual Funds have made it mandatory to provide bank details along with IFSC ( Indian Financial System Code ) and MICR ( Magnetic Ink Character Recognition ) codes

Only pain point would be that , you may not be knowing these code for your branch , here is a website that can help you find this piece of information without any hassle

This website provides you the MIRC code and the bank branch address too :
Find IFSC CODE here

NEFT

National Electronic Funds Transfer (NEFT) is a nation-wide system to electronically transfer funds from any bank branch to any other account with any other bank branch in the country as per RBI 80,000 bank branches are currently part of this network

Office hours
NEFT operates in hourly batches - there are eleven settlements from 9 am to 7 pm on week days and five settlements from 9 am to 1 pm on Saturdays .

Transactions from 9 am to 5 pm and on Saturdays transactions from 9 am to 12 noon get credited on the same day. Transactions between 6 and 7 pm and on Saturdays transactions after 1 pm batch would get credited either on the same day or on the next working day

How does this work
All NEFT request which is presented to our respective banks are forwarded by the bank to National Clearing Cell of the RBI ,which is focal agency for forwarding this request to the bank at the receiving end of the request .

IFSC
Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. This is a 11 digit code with the first 4 alpha characters representing the bank, and the last 6 numeric characters representing the branch.
Find IFSC Code

Answer to all your NEFT questions
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ASBA

When a retail investor invested in an IPO ( Initial Public Offer ) or an FPO ( Follow Up Public Offer ) , the Investor had to pay the entire application amount upfront and it would take upward of 15 days to get through this process, before stocks are finally listed .

This means that your application money would we LOCKED up during this period and in case there has been over subscription to a issue , you will not be allotted your entire applied quantity of shares and then you would have to wait for your refund

So in order to avoid all these confusions ASBA or Application Supported by Blocked Amount was introduced .

This is how it work , when you apply instead of actually transferring the entire amount to a escrow account, the amount would continue to be in your account , but this amount would be LOCKED , hence you cannot withdraw this amount .

So after all the allocation process have been completed , the requisite locked amount will be debited from your account .

So what does this mean to the investor

a) The Investor's money would continue to earn interest for him ,untill it is finally debited

b) In cases of over subscribed issues, only amount for the allocated shares would be debited , so there is no question of refund and hence all delays and disputes associated with refund is removed.

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No Third Party Cheques

Association of Mutual Funds in India (AMFI) issued best practice guidelines on ‘Risk mitigation process against third party cheques in mutual fund subscriptions’. In line with these recommendations Mutual Funds shall not accept applications for subscriptions with third party payment instruments .

What is a Third-Party instrument
· When payment is made through instruments issued from an account other than that of the beneficiary investor, the same is referred to as Third-Party payment.

Exception to the Rule
· Payment by Parents/Grand-Parents/related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding Rs. 50,000/- (each regular purchase or per SIP installment);

· Payment by employer on behalf of employee under Systematic Investment Plan (SIP) facility through payroll deductions;

· Custodian on behalf of an FII or a Client.

· Payment received from a joint bank account where the first holder of the mutual fund folio is one of the joint holders in the bank account from which payment is made.

Source HDFC Mutual Fund

How many Bank account you ought to have

I would recommend that a salaried person , Ideally must have atleast three accounts

First of the account is the Salary account , the account into which your salary would get credited , this account would not be used for any other purpose other then salary credit . The day you change your job and the new employer is not able to use the existing account this account must be closed

Second account would be your Investment Account , this account would be used to route all your investment , all your premium payments ,credit card payments,all ECS, all bill payments . Take care to choose a bank for this account ,which would provide internet banking ( with a very good customer care ), bank which would proactively make sure that it is enrolled as preferred payment bank across various vendors and service providers.

Third account would be your Emergency account , this account would be used to put some or substancial money for emergency and This account must be , no excuse, has to be a sweep account , so that money lying here will not just lie idle, but earn optimal interest .

What is advantage of splitting accounts , well
1) When closing old unused salary account , you are sure , you will never receive DDs,ECS request , which will be drawn on the closed account , as all investment were routed through Investment account

2) You want to find detail of all payments , Investments made , Dividends received just get a statement of your Investment account and lo .. all details are there for you

3)You are concerned , that you may accidently invest money in illiquid instrument , money meant for emergency , that would never happen as your emergency cash is in a totally different account

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Sweep Account

These are Hybrid Savings Bank accounts that are being provided by public as well as private bank , they are being offered for some time now

How do these account work:
Most of the banks have a pre defined amount say Rs.10,000 as the limit .Any amount above this would be automatically be swept into a FD, mostly in multiples of Rs.1000. You can even chose the durations of these FD (Fixed Deposits )

Let us say you have Rs.30,000 in you account, that would mean Rs.10,000 in saving account and Rs.20000 as 20 FD of Rs.1000 each , In case you issue a cheque of Rs.11,000, then one of those FDs would be encashed and used to honour your cheque.


Advantage :
The advantage of such an account would be , your money starts to work a bit harder , instead of Savings Bank interest rate , you money starts earning higher interest rate of an FD

Most of the Pubic sector bank have lower limit for the swap to be triggered compared to the private sector banks .

Corporation Bank : http://www.corpbank.com/asp/0100text.asp?presentID=1355&headID=19


SBI : http://www.sbi.co.in//viewsection.jsp?id=0,1,19,113,185

These are just a few , would recommend that you , always try to open a sweep account instead of a normal savings bank account