If you go to open a bank account, you are asked to open a savings account or a current account. Similarly, when you go to withdraw money at an ATM, you have the option to choose between the Savings Account and the Current Account on the screenboard of the ATM machine in front of you. In this article, we will know what is called current account? What are its advantages and disadvantages? And what is the process of opening it? At the end of the article, we also provide information about the documents required to open a current account.
What is the current account?
Current account is also called financial account. Because it is a type of deposit account, there are many transactions inside this account and this account is opened by the bank for those customers who do a lot of transactions with the customer bank. The account is for merchants, agencies, companies, public enterprises. , Etc. because they have to do a lot of transactions with the bank all day long.
And no interest is paid inside the current account like interest is paid on your savings in your savings account. But some banks also pay interest on the current account. And it is very important for a trader to have a current account. You can go to any bank and get open a current account.
How current account is different from saving account?
To understand the difference between a both accounts here is a brief introduction of both.
Savings account
This account is for the general public, created to encourage people to save. Although interest is available on bank deposits, the number of money transactions is limited. Charges are deducted for transactions exceeding the prescribed number. However, the growing trend of ATMs and online transactions has largely reduced this problem.
Current account
This account is designed to facilitate unlimited transactions as per business requirements. The bank pays no interest on the amount deposited in the current account, but there is no restriction on the number of transactions. Usually traders, firms, companies, public enterprises etc. keep only their current accounts. Money is deposited or withdrawn in the current account several times a day.
Five main differences of them are as listed below.
- In a Savings Bank account, you can withdraw as much as the bank has set, but in the current bank account you can make unlimited transactions.
- You will not receive any interest on the amount deposited in the current account but it is paid in the savings account.
- In a savings account, you can also open an account with zero balance, but in the current account you have to keep the minimum balance otherwise you will be charged for it.
- There is a limit on maintaining balance in a savings bank account, tax is payable for excess balance, but there is no limit in current account.
- The Savings Account will be suitable for employees, merchants, but you will not be given any limits or conditions in the Savings Bank Account.
Features of current bank account
Today, the current bank account is a basic requirement for any business, if one wants to start a business and meet the financial needs of any business; many current account offers offer various benefits to the current account in all banks.
- The current account offers more transactions than the savings account
- The minimum balance must be kept more in the current account than in the savings account
- The current account is designed for many benefits such as transfer of funds, acceptance of checks, cash etc.
- The current account is managed by an individual, proprietorship, public and private companies, associations, trusts.
- There are no translation restrictions on the current account.
- Current accounts like KYC guidelines are followed like Savings Account
- A business should have a single current account.
- Current account intended businesses need to be facilitated for smooth transactions.
Who can open a current account?
Any citizen or organization can open a current account for themselves with appropriate KYC documents (identity certificate, address certificate, date of birth certificate, registration certificate etc.). We also provide a list of who can open a current account.
- joint Hindu family
- sole proprietorship firm
- a partnership organization
- Company (Private or Public Sector)
- the Limited Liability Partnership (LLP) firm
- Trusts, societies, associations, clubs, etc.
- liaison or representative office
- a company’s project office
- branch office of an organization
Benefits of current account
![benefits of current account](https://paiseloan.com/wp-content/uploads/2022/03/Benefits-of-current-account.jpg)
- The current account allows all business transactions
- There is no withdrawal limit in the current account.
- And there is no limit to the current inside the deposit, we deposit inside the home branch.
- Any trader can pay directly from check, demand draft to current account.
- Current account provides overdraft facility
- Current account also offers many benefits like internet banking and mobile banking.
What things need to keep in mind when opening a current account?
When choosing a bank account, you need to know a few things.
Location: – The first point is the location of the bank branch. A bank should be close to your business location and accessible to your business needs. It will provide internet banking, mobile banking and good ATM network / bank network as per your business needs.
Overdraft Limit: – A bank should also look at the overdraft limit given by the bank.
Minimum average monthly balance: – Minimum average monthly balance is an important factor for selection. If you start your business early, you will need money, so it is best to choose an account with a minimum or zero average monthly balance.
Service Charges: – Service charges levied on various facilities like demand draft, check book facility, online fund transfer; debit card etc. should also be compared with all banks.
Low charge on NEFT / RTGS – Even for transferring money online to another bank using NEFT or RTGS, banks charge a slightly lower percentage than the normal charge for having a current account. If you settle such an agreement through net banking, it can also be free.
Statement – Banks also provide current account holders with the facility to provide transaction statements based on their needs. You can set the duration frequency according to your own.
Special benefits – Banks offer many other benefits to current account holders. For example, taking lower processing charges for retail loans (retail loans – related to houses, cars, houses, etc., issuing credit cards with special benefits, etc.) Banks have now created sections for current accounts. The category is better for you. Level special benefits can be given.
Where can I open current bank account?
Although, every bank provides the facility to open current bank account, some legendary banks are listed below.
ICICI Bank Current Account: – ICICI Bank offers a wide range of current bank accounts. These include the new Startup Current Account, Subramanian Current Account, Smart Business Account and Roaming Current Account. If you are starting a new business, you should consider a new startup current account or a suburban current account.
HDFC HDFC Bank Current Account: – Like all other banks, HDFC Bank offers many options for existing bank accounts. It includes smart up solutions for Ultima Current Account, Apex Current Account, Max Current Account, Plus Current Account, Premium Current Account and Start-up Account.
Axis Bank Zero Balance Current Account: – Axis Bank Zero Balance Current Account is the second best current account in the list. With this account, you can enjoy Zero Balance facility.
Kotak Mahindra Bank Current Account: – Kotak Mahindra Bank offers multiple options for existing bank accounts such as Neo, Start-up Regular, Start-up Premium, Global Trade, S etc. It is suitable for small business setup.
SBI Bank Current Account: – State Bank of India (SBI) offers various types of current account facility based on the profile of the entrepreneurs which can cater to the needs of different businesses. This is a different business.
Types of Current bank Account.
If you go to a bank to open a current account, the bank offers different types of current accounts.
Standard current account
This is a deposit account with non-interest. This account should have average monthly balance and this account is provided with check book, debit card, overdraft facility etc. and there are many features inside this account such as; Internet Banking, SMS Banking, Free RTGS and NEFT Transactions etc. So if one wants to open a current account for business then this is right for him.
Packaged current accounts
Among the packaged accounts many benefits are offered to the account holder such as; Many more features like travel insurance, medical assistance, roadside assistance etc. are available in this current account and provide many benefits as per customer’s requirement.
Single column cash book
Ordinary cash account and single column cash book is also a current account, this account allows daily transactions but no overdraft facility is available inside this account, this account is very good account for business because it works like a hair book for any business.
some of the disadvantages of the current account
Difficulty to open current bank account.
Of all the advantages of having a current account, there are some disadvantages as well. There are many charges that are not charged with a general savings account and there are many charges that are many times higher than a savings account. The main disadvantages of current account are given below.
There is no interest on the deposit
You will not receive any interest on the money deposited in the current account, where banks pay interest of 4 to 6 percent on the money deposited in the savings account. In some other special deposit accounts like fixed deposit and recurring deposit, it can be more.
A certain minimum deposit is required.
The account holder has to deposit a certain amount in the current account. According to different banks, it could be 2.5 thousand, 5 thousand, 10 thousand or 15 thousand or more. (May be the average quarterly balance). That is, if you can not do it. If you fail to maintain the required quarter. Average balance, this is also deducted. Although general savings account may have minimum deposit requirement, it is not very high.
Current account maintenance charges
Not that instead of having a current account with the bank, the bank provides you with the above mentioned business needs. You may have to pay a small amount each month for this. Usually it can be Rs 50 to Rs 100 or more per month.
Check book abuse
Money is often withdrawn from the current account by check. In the case of money transactions, it often acts as an associate or trustee rather than an account holder. In many cases, fraud occurs through account holders’ fake signatures or fake checks.
Charges for Check Leaf Beyond Limits are also deducted on checks exceeding the prescribed limit.
The check is used to withdraw money from the current account. Banks only issue free check books within a certain limit, if you use a large number of checks, you may be charged for each check. Demand Draft and Pay-Order also require a fee for using more than a certain number.
Required documents to open a current account
- Recently taken passport size 2 photo, not more than three months old.
- Proof of Identity like Aadhaar card, PAN card, passport, voter ID, driving license etc. any one.
- Address proof : Photocopy of Voter Identity Card, Driving License, Aadhaar Card, Passport, Ration Card, Bank Passbook, Electricity Bill, Water Bill etc.
- A check, for an initial deposit to open an account. Account opening check: which should be a savings account or personal current account opened in your name.
- Form 60: If PAN card has not been created yet and has applied for PAN card, it is mandatory to provide Form 60 in its place. This is a kind of declaration, so that the applicant gives in writing that he does not currently have a PAN number. In this case, you will need to submit your signature below stating the reason for not getting your name, address and PAN number.
In case of opening a joint account, all the account holders have to submit photo, proof of identity, proof of address etc.
The government has made PAN card and Aadhaar card mandatory for all bank accounts and investments except basic micro savings account. Therefore, before you start the process of opening a current account, make sure that you have both of these documents. If PAN card is not available now, Form 60 can be submitted in its place.
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