SWIFT Code: Format & Usage

The SWIFT code information is only meant to be used as broad guideline. Although every attempt is taken to guarantee correctness, the website disclaims all liability for any mistakes. To guarantee accurate account information for important or urgent payments, it is best to confirm facts directly with your bank. 

Why is SWIFT Code Important in Cross-Border Transactions?

The following justifies banks' usage of SWIFT for cross-border wire transfers:  

1. Security: To ensure the legitimacy of transactions between two entities, SWIFT uses advanced data encryption and decryption algorithms.  

1. Fund Transfer Ease: The SWIFT network makes it easy and highly secure to move money overseas.  

1. Compliance: Given the numerous intricacies involved in cross-border transactions, especially international trade, SWIFT enables the highest level of compliance.  

1. Global Network: With its global stockholders, the SWIFT network helps many nations worldwide reap the rewards of globalisation.  

1. Efficiency: SWIFT guarantees a timely and cost-effective delivery of payments to the designated recipient. 

How SWIFT Works in Cross-Border Transactions

Let's say you have a bank account and would like to send money to a relative in the USA who has a local bank account. You will need the recipient's bank information, including the USA-based bank's SWIFT code, in order to complete this transaction. 

Once the request has been started, the bank notifies the USA bank of the payment via the SWIFT network. 

Similar to how you could alert a friend about sending them money, the SWIFT network functions as a secure communication channel where banks can alert one another about upcoming transactions. 

Difference Between SWIFT and IFSC Code

The differences between SWIFT and IFSC Code are given below:

IBAN vs SWIFT

You should also be aware of the International Bank Account Number (IBAN) while using SWIFT to make international bank transfers. To put it simply, an IBAN identifies specific accounts engaged in a cross-border transaction, while a SWIFT code identifies a banking organisation. 

Understanding SWIFT Codes

The SWIFT code, also known as the Business Identifier Code (BIC), is a unique identification number that SWIFT provides to financial institutions that are part of its network. These codes are made up of eight or eleven characters and follow International Organisation for Standardisation (ISO) 9362. 

1. First four characters: Represent the financial institution’s code. 

1. Fifth and sixth characters: Denote the country code. 

1. Seventh and eighth characters: Indicate the city code. 

1. Last three characters: Specify the bank branch (optional). 

For example, HDFC Bank’s SWIFT code is HDFCINBB.

1. The first four letters, "HDFC," identify the institution. 

1. The next two letters, "IN," denote India as the country. 

1. The final two letters, "BB," represent the head office in Mumbai. 

How to Locate a SWIFT Code?

You can go through banking-related papers, such bank statements, to find your Swift code. Your online banking profile also allows you to view bank account information.  

If you are still having trouble finding the Swift code, you can also use the digital BIC or SWIFT search tool, which allows you to obtain your Swift code by providing a few key parameters like your country of residence and bank location. 

Things to Know About SWIFT Code

Given below are some of the things you need to know about SWIFT Code: 

1. Banks and other financial institutions utilise SWIFT codes, which are alphanumeric identifiers, for worldwide identification. Processing money transfers and overseas remittances is its main use. 

1. The bank code, country code, location code, and branch code are some of the parts that make up the SWIFT code. You need to supply information such the beneficiary's name, bank account number, SWIFT code, and account number in order to finish an international money transfer. 

1. An IFSC code, rather than a SWIFT code, is needed for domestic money transactions within India. 

How IFSC and SWIFT Codes Differ in Global Transactions

Financial organisations use IFSC codes to identify the specific bank branches when transferring funds since they make it easier to verify the banks' identities. The Reserve Bank of India (RBI) also successfully uses them as a code for domestic electronic fund transfers. 

Ensuring seamless money transfers between various financial institutions is another of the main goals of an IFSC code. IFSC codes are exclusive to the Indian banking sector, in contrast to Swift codes. It is just intended to monitor domestic transactions; it does not involve any international activities. 

What is the significance of a bank's SWIFT code?

It is essential to comprehend the significance of the bank SWIFT Code in addition to its definition. Prior to SWIFT, bank executives painstakingly transcribed each sentence involving international fund transfers, which resulted in longer transfer times and conversations that were riddled with errors. In order to streamline fund transfers, cut down on transfer delays, and eradicate manual errors, SWIFT was created in 1973.  

International money transfers are a little more difficult than domestic ones. You want your funds to go to the appropriate bank account in a foreign nation. You cannot move money abroad without SWIFT, and banks are unable to recognise transactions. Because of the integration of the SWIFT network, banks have the ability to reject your remittance request if you submit the wrong code.