What is International Bank Account Number(IBAN)?

The International Bank Account Number is a standard numbering system developed to identify bank accounts from around the world. It was originally developed by banks in Europe to simplify transactions involving bank accounts from other countries. It is an international standard for identifying bank accounts across national borders.

In India, each bank account don’t have an IBAN number. Instead Indian banks work with other European Banks for the money transfer through IBAN system. For example, ICICI bank works with JP MORGAN CHASE to transfer money from Europe to an Indian ICICI bank account.

The IBAN was developed to make the transactions easier within the European Union but the customers especially individuals and SMEs (small and medium enterprises) often get confused with the differing national standards for bank accounts. The IBAN has not been widely accepted outside Europe and so it is not yet used for routing purpose. According to the European Central Bank’s expectations the adoption may take up to ten years and so it remains necessary to follow the current Bank Identifier Code system (called BIC) or SWIFT code in conjunction with the BBAN or IBAN.

The features of IBAN System

The IBAN consists of a country code, followed by two check digits(kk) and the domestic bank account number, called the BBAN (Basic Bank Account Number) contains up to thirty alphanumeric characters. The length of the BBAN for accounts in a country depends on the decision of each country’s national banking community, but the length should be fixed for any given country. The IBAN number should not contain spaces when stored electronically. When printed on paper, however, the norm is to express it in groups of four characters, the last group being of variable length.

For example in UK, IBAN number will be as follows:
IBAN format: GBkk BBBB SSSS SSCC CCCC CC
B = alphabetical bank code, S = sort code (often a specific branch), C = account No.

At present all European countries, as well as some African countries, and Turkey participate in the IBAN system. The rest of the countries remains outside it. The British dependencies other than Gibraltar and the Crown Dependencies do not accept the IBAN system.

The United States also does not adopt the IBAN system and any adoption of the IBAN standard by U.S. banks would likely be initiated by ANSI ASC X9 which is the U.S. financial services standards development organization.