MICR, or Magnetic Ink Character Recognition, is a unique code printed at the bottom of cheques using specialized magnetic ink and technology.
This code typically comprises 9 digits: the first three denote the city code, the next three the bank code, and the final three the branch code.
The primary function of MICR is to expedite and streamline cheque processing and clearance by enabling automated machine reading and sorting.
This automation minimizes manual errors, enhances accuracy, and allows banks to efficiently clear substantial cheque volumes via the Electronic Clearing System (ECS).
Although cheque truncation services also involve digital processing, MICR's main application is in the electronic clearance phase.
Core banking solutions and electronic funds transfers do not directly employ MICR for transaction processing.
Consequently, option (C), electronic clearance of cheques, is the accurate selection.