MICR

What is MICR (Magnetic Ink Character Recognition)?

MICR is a technology in banking that helps in verifying the authenticity and processing of cheques efficiently. It is a special ink and character recognition system, which reads and processes cheques fast and securely. The MICR code is a unique 9-digit code printed on the bottom of every cheque in India.

What does MICR stand for?

Magnetic Ink: The ink used contains magnetic particles, enabling machine readability.
Character recognition refers to the system that can read and decode the printed characters.

Components of a MICR Code

The 9-digit MICR code is divided into three parts:

• City Code: The first 3 digits represent the city (aligned with the PIN code).
• Bank Code: The next 3 digits signify the bank.
• Branch Code: The last 3 digits denote the specific branch.

For example, if the MICR code is 400002051:

• 400: Mumbai (city)
• 002: Bank code
• 051: Branch code

Uses of MICR

1. Cheque Clearance: Speeds up the clearing process by enabling automated reading.
2. Authentication: Ensures cheques are genuine and have not been tampered with.
3. Accuracy: Reduces human errors in cheque processing.

How does MICR work?

• The magnetic ink on cheques is scanned by MICR readers.
• The machine deciphers the code and verifies the cheque details.
• The system facilitates quick processing and settlement of payments.

Importance of MICR

• Efficiency: Speeds up banking operations by automating cheque clearance.
• Security: Reduces fraud by identifying alterations or forgeries.
• Reliability: Ensures smooth processing of cheques across banks.

Where to find the MICR code?

• Printed at the bottom of every cheque, near the cheque number.
• Mentioned in the bank account passbook or statements.