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All of us encounter cheques on frequent basis. My urge to know more about the cheque begum when I was handed over the stipend cheque last month. All this while I had never paid heed to the intricacies of a Cheque. The only number I would focus when my stipend cheque landed into my hands, was the stipend amount and obviously the date! However, this time I noticed certain other numbers too and although I knew about those numbers( Chq no., MICR code..), I wanted to know little more about the same. After all these were the reasons behind my Principal asking Clients to handover a cancelled cheque whilst registrations, etc.

I googled, but I could only get little information about MICR.(I must admit that it was a little heavy for me to digest.)Finally, I went to my Bank and asked a Bank Official about the same. He was kind enough to explain me the following 

1) Cheque Number

The first set of numbers represent the cheque number. It is a six digit number.

2) MICR Code

It stands for Magnetic Ink Character Recognition. This number helps a bank to recognize the bank and branch that issued the cheque. You might be thinking that this can be done just by looking at the cheque, but banks have to process hundreds of cheques daily. Going through each and every cheque is a cumbersome process. Instead, the cheques are sorted through a cheque reading machine which uses this number to identify the bank and branch a cheque belongs to. This makes the process faster.

The MICR number is a nine digit number, which consists of three parts-

a) City Code: The first three digits represent the city code and are same as the first three digit of the PIN code of that city.

For e.g., a bank in Maharashtra will have first three digits of MICR code as 400

b) Bank Code: The next three digits represent the bank code. Every bank has a unique code assigned to it. For e.g., in case of HDFC it is 240 .

c) Branch Code: The last three digits represent the branch code.

Thus you can easily find which bank and branch a cheque belongs to by looking at its MICR number, and vice versa.

3) Bank account Number

The third set of six digit numbers represents your account number (It consists of a few digits of your account number). But if you pick an old cheque book, issued probably before CBS (Core Banking Solution) was introduced, you won’t find this set of number present.

4) Transaction ID

The last two digits tells whether a cheque is a local cheque our payable at par cheque. 29, 30 and 31 represents payable at par cheque, while 09, 10 and 11 represents local cheque. Payable at par cheque is a cheque that can be cashed at any branch of the issuing bank, while local cheque can be cashed only at the issuing branch. So, if you deposit a cheque in your bank, with code 10 written at the bottom of the cheque, it’ll take a few days for the money to come in your account. However since most of the branches these days are CBS (Core Banking Solution) enabled, so the cheques are generally payable at par.

An Interesting Thing…

Before ending  , I want to point your attention to another interesting thing. These numbers are written in a different font style with a special ink that contains magnetic material that is IRON OXIDE so that it can be recognized by Magnetic Character Ink Reader.

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Published by

Pooja Tewary
(Hedge Fund Accountant)
Category Professional Resource   Report

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