MICR stands for Magnetic Ink Character Recognition. It is a technology which allows machines to read and process cheques enabling thousands of cheque transactions in a short time. MICR Code of bank is usually a nine digit code comprising of some important information about the transaction and the bank.
The 9 digit MICR code varies from branch to branch for all the indian banks. Here is how the code can be decoded
The first 3 digits of MICR code of bank represents the city of the branch of the corresponding bank. The middle three i.e 4,5,6 digits represent the unique bank code. The Last three digits of the bank represent the branch code.
The MICR Code of bank acts as an security bar code to protect your transaction, the MICR code is also an indispensable part for online money transfers. Every bank branch is given a unique MICR code and this helps the RBI to identify the bank branch and speed up the clearing process.
The manual clearing of cheques takes too long for clearing and there is a possibility of many human errors. The MICR code of bank on the cheque printed with a unique magnetic ink usually iron oxide has magnetic material present in it and thus makes it machine-readable and almost error proof!
Under this method the reading machine or a cheque sorting machine reads through a cheque when inserted and identifies the branch the cheque belongs to and activates the automation clearing process.
The MICR code of a bank is so clear and fine that the machine could read it even if the MICR code isn't visible due to other marks or stamps on it.
Loan Amount is 1210000
No. of Months is 147
Rate of Interest [ROI] is 10.2