During late 80’s cheque usage was increased as people like you depositing in banks was increased. With the increase in usage of Cheque, it become difficult to clear cheque in less time along with accuracy. Government of India wants to upgrade the cheque clearing system to provide customers like you to have a hassle free service. These circumstances gave birth to MICR Code technology.
Pattern of MICR Code :
You might know this MICR code technology comprise of MICR code on cheque & MICR code reader in bank branches. This unique code is given to each bank branch in each city. MICR code is 9 digit numeric code which indicates city, bank & branch.
You please observe below code, this is MICR code for NIT, Bhopal SBI bank branch. In any code first three digits represents your City, next 3 digits are your bank code. Last 3 digits are your branch code.
Means 462 is Bhopal City code in which I live present, 002 is SBI Bank code. 014 is my NIT SBI branch code in Bhopal.
I’ll give you another banks code. This code belongs to ICICI Bank, Anantapur branch. In this 515 is code for Anantapur City, 229 is code for ICICI Bank. 002 is the branch code.
Each banks MICR code is written below in Magnetic Ink, at the bottom of each cheque leaf. You may feel that the code I explained is different from what is printed on cheque. The thing is that this MICR code is encoded and then they print.
This is called MICR Line, this contains more information than what we discussed till now. But as an Job aspirants you don’t need all this stuff, because computers can manage this. To know more check Wikipedia.
After knowing about the pattern of the Magnetic Ink Character Recognition code, you need to know where MICR code is used. As discussed down the post, it is obviously used in cheque clearing system.
Limitation of MICR Code :
Though the it has served its purpose over the years, there was a limitation in the code as total number of banks that this code could accommodate was only 999 though there are more than 1780 banks operating in the country.
This limitation of allotting unique codes to each bank at an all-India level was managed till date since most of the cheque clearing systems were local in nature.