What is MICR?
It is common for most of us to see the magnetic inks bar like codes that are printed on the lower parts of the cheque leaves from our banks. These are what are called the MICR code which stands for Magnetic Ink Character Recognition.
MICR, in actuality is the name of the technology that has been used in code printing.
Reserve bank of India in the early years around 1980s brought into practice a variety of new methods for the safety and effective systems of payments in various parts of the country. MICR system of cheque clearance was one of such many methods that were introduced.
The MICR code also has become an inseparable part for the money transfers through online medium besides being a bar code of security for the transactions. Nowadays, almost every bank and its branches are given MICR codes which are unique and also helps the RBI in identification of the bank branch, thereby speeding up the process of money clearing.
What does it comprise?
The printing of the MICR characters is done in E-13B mode or CMC-7 Font. Each of the series of Font comprises of a set or series of symbols and numbers that could be read by cheque sorting machines which have the capacity to read at very high speed rates. These symbols act as a beginning point and end point for a group of digits or numbers, whereby the machine can rapidly know what the significance of the series of numbers. Character placements, quality, skew and line placements are the criteria of printing of the MICR. The positioning of the lines must be at the clear band area of the MICR. Readability of each character in the MICR is essential to bring on the consistency in the clearing process of cheques and the methods of cheque printing must be reliable.
How does MICR help speed up the processing of Cheques?
During the manual cheque clearing process, there are probabilities of errors and thereby a delay in the clearing process. MICR codes that are printed on the cheques with usually iron oxide which is an ink made of magnetic material, makes it easy for the machine to reach and that too, without error.
When the cheque is put through the reading machine or a machine that sort out cheques under such method, the cheque is identified as belonging to a certain branch and the automated clearing process is simultaneously activated.
The system of MICR code has been proved to be efficiently clear and smooth that the machine is capable of reading the code even if it is not clear due to some marks or stamps.
According to the payments in India, Vision 2009-2012, by the Reserve Bank of India report, MICR codes will be provided to all bank branches.
It is also the intention of RBI to reduce the clearing process based on paper by the introduction of MICR-cheque processing centres which will be able to clear more than 95% of volume of cheques that are processed in the country.
