What is the significance of the MICR Code in the Banking industry?
It is a code provided to banks to identify the branch in electronic fund transfers
It is a coding system used by the ATMs to decrypt the password entered into the system for withdrawals.
It is a code used to identify the bank branch to which the cheque belongs.
It is a coding system used to assign Credit Rating to the customers of the banks to maintain their credit history.
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. Every bank branch is given a unique MICR code and this helps the RBI to identify the bank branch and speed up the cheque clearing process.