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Definition of MICR Code

MICR stands for magnetic ink character recognition, and MICR codes are used in Indian financial institutions. This nine-digit code stands for the city, band and branch of a bank and is used for processing and posting checks.

  1. Purpose

    • MICR codes are used to identify bank and account information. The codes are read by machines, offering a quicker and easier process for the clearing of checks.

    Features

    • This nine-digit code is printed on checks using a special type of ink that contains magnetic material. The machines read the magnetic information. The information tells what bank the check is from and whose account it is. The first three numbers tell the city of the bank. The next three numbers state which bank it is and the last three numbers tell which branch of the bank it is from.

    Benefits

    • MICR codes are used for many reasons. They provide an easy and fast way for processing checks. By allowing a computer to read the information, errors from human mistakes are reduced. The magnetic ink used does not transfer if a check is photocopied; therefore, it also reduces the possibility of fraud.

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