How Cheques Works?

Cheque is a banking instrument that can be used to transfer some one fund physically without carrying the bank notes. It is the best replacement of the bank notes.

What Cheques Consist of?

Cheque consists of different section that holds different meaning and can be used to find that it wanted to address. So the following are the details that are printed on the cheque slip-

• Bank Emblem- The Logo Of the Bank
• Bank IFSC Code- Unique 11-digit Alpha Numeric code used to find the bank branch.
• Bank MICR Code- Magnetic Ink Character Recognition Code to ease the processing the cheque  
• Account Payee Name
• Amount in letters
• Amount in number

How Cheques are Processed?

Cheques are processed when you deposit the cheque in the bank. The bank teller will accept your cheque along with the form filled with it. Let’s say you got your cheque from bank SBI and you have an account in Bank Canara Bank. So you will Deposit the cheque n the Canara bank along with the form then the Canara Bank will send the bank to SBI to clear it which then will be debited to your account from the person account who wrotethe cheque to you. It usually takes 2 days to get it cleared but now, the process is fastened up and the bank transfers the money right away.

How MICR Code is Used In Cheque?

MICR Code is a 9-digit Code which is unique to every bank branch. This is used to find the bank branch based on the location by the clearing house. Each 3 digit in the MICR Code contains some sort of information that tells about the bank branch.

First 3 digits is the city code followed by 3 digit bank code and then bank branch code. For example- SBI Mumbai Main Bank Branch has a MICR Code- 400002010, “400”-city code, “002”- bank code and “010”-branch code.