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What is Current Account?
Current accounts are a type of non-interest-bearing bank account used to serve businesses’ day-to-day financial needs. They are often used by business owners and corporations to manage their finances.
Recent digitization of finance has led to the rise of digital-only bank accounts that have made banking easier than ever. Businesses can open current accounts from the comfort of their homes, and enjoy a myriad of customized features like integrated vendor payments, payroll, corporate credit cards and more, all from one single account.
Current Account Features
Understanding what is current account means knowing the various features that help businesses in their day-to-day activities. Let’s have a look:
- Non-interest bearing account since current accounts are designed for high liquidity and ease of access. Since banks can’t rely on a steady pool of funds in current accounts, offering interest wouldn’t be profitable for them.
- Higher withdrawal and deposit limits to support business’s day to day financial needs
- Overdraft facility for business’s working capital needs
- Credit or debit card facilities and a relationship or account manager
- Special features to support businesses like bulk payouts, vendor management, accounting integrations, etc. These features are usually offered with digital current accounts, like the ones powered by RazorpayX.
Current Account Benefits
There are many reasons why business owners should opt for a current account over a savings account. A few benefits of a current account are listed below:
Read more: Current Account vs Savings Account
- Overdraft facility helps cover unexpected business expenses and help improve liquidity.
- Most providers offer special, customized current accounts for all kinds of businesses. For example, RazorpayX Business Banking+ Core is for businesses just starting up, with essential banking features like payouts and mobile app access. Check out the different kinds of accounts RazorpayX offers here.
- Current accounts allow for high accessibility, with features like mobile apps and internet banking, making your business’s finances accessible to you anytime, anywhere.
Get your RazorpayX Current Account Now
Monthly Average Balance Requirement for Current Account
In India, the MAB requirement for a current account can range from as low as Rs. 5,000 to as high as Rs. 1 lakh or more depending on the bank and the type of account. Some banks may offer a zero-balance current account for certain categories of customers such as startups or small businesses.
It is important to note that if the MAB requirement is not maintained, the bank may levy a penalty, which can range from a nominal amount to a percentage of the shortfall in the MAB. The penalty can vary depending on the bank and the specific terms and conditions of the account.
Therefore, it is advisable to check with the bank of your choice for the specific MAB requirement for the current account and any other terms and conditions before opening an account.
Current Account Example
All banks that offer savings accounts to regular individuals also offer current accounts for businesses and business owners. RazorpayX is one such fintech that offers a superior business banking experience for business founders.
Here are some of the features offered by RazorpayX:
➡️ Automated Accounting, OTP management
➡️ Maker-Checker Flows
➡️ Collateral-free Corporate Cards with higher limits
➡️ Forex & Funding Management
➡️ Automated Vendor Payments
➡️ Payroll – India’s ONLY payroll with Full Compliance Automation, Employee Insurance Management and TDS Filing
Current Accounts for SMEs, Startups, Mid-Market, Enterprises
1. Basic Current Account:
This is the simplest and most affordable option, suitable for startups or small businesses with minimal transaction volume. These accounts offer the most important and essential features like online banking or cheque facilities.
2. Regular Current Account:
A step up from basic, offering higher transaction limits and more features. These accounts are ideal for established businesses with moderate transaction needs.
3. Premium Current Account:
These accounts cater to businesses with high transaction volumes and complex financial needs. They include premium features like dedicated relationship managers, priority customer service, and free international transactions.
4. Foreign Currency Current Account:
These accounts are designed for businesses that conduct international transactions regularly, allowing holding and transacting in multiple foreign currencies. There may be specific fees associated with currency exchange and international payments.
5. Cash Management Current Account:
These accounts are geared towards businesses requiring sophisticated cash flow management tools. It offers features like automated collections, account aggregation, and advanced reporting.
6. Trade Current Account:
These accounts are specifically designed for businesses involved in import and export activities. It integrates trade finance solutions like letters of credit and documentary collections.
Current Account in Foreign Trade
In terms of foreign trade, a country’s current account refers to the record of a country’s transactions with the rest of the world. All trade transactions – import and export are recorded in the current account of the country.
The current account of a country may be in the positive (surplus) or in the negative (deficit). If the exports are more than the imports, the current account will be in the surplus. If the country imports than it exports, the current account will be in the positive.
Current account of a country is one half of its balance of payments – the other half being the capital account, which measures a country’s investments in cross-border financial instruments and changes in central bank reserves.
How to Open a Current Account
There are two ways to open a current account: online and offline.
Generally, people opt for the online mode since it offers flexibility and ease of access. It eliminates the need to go to the branch and deal with paperwork and queues.
Online mode:
- Visit the website of your chosen current account provider and sign up on their form.
- Wait for a call from a representative who will help you with further steps.
Offline mode:
- Visit the nearest branch of your chosen bank and get in touch with an account manager.
- Some banks also provide offline support on telephone.
Documents Required to Open a Current Account
- KYC Documents
- Business Registration Documents
- Proof of Business Address
- Business PAN Card
- Other Documents
Frequently Asked Questions
1. What is a Current Account?
A current account is a type of bank account that allows for frequent and immediate access to money, as well as the ability to store and transfer funds. Many current accounts offer debit cards that can be used for purchases, as well as direct debits and standing orders for regular payments.
What are the benefits of having a Current Account?
A current account provides many benefits, including the ability to access your money quickly, the ability to manage your finances easily, and the ability to take advantage of features like overdrafts and credit cards. Current accounts also offer a range of services, such as online banking and interest-bearing accounts.
How do I open a Current Account?
The process for opening a current account varies by bank. Generally, you will need to provide proof of identity and address, as well as evidence of any regular income. You may also need to provide a minimum opening deposit.
How much does a Current Account cost?
The cost of a current account varies depending on the type of account and the bank. Many banks offer free current accounts, but some may charge a fee for certain services. It is important to compare the costs of different accounts before making a decision.
What are the different ways to deposit cash into a current account?
There are several ways to deposit cash into a current account, including:
Cash Deposit at Bank Branch
Cash Deposit at ATM
Cash Deposit through Cash Deposit Machine (CDM)
Cash Deposit through Cash Pickup Service
Cash Deposit through Mobile Banking or Net Banking
What are the different types of access provided by a current account?
A current account provides various types of access to its holders, including:
Cheque Book
Debit Card
Online and Mobile Banking
Phone Banking
Branch Banking
How does a Current Account help Founders?
A current account can help founders in a number of ways. Let’s check it out.
-It can help them manage their finances, make payments to suppliers and other vendors, receive payments from customers and keep track of any business expenses.
-It also provides access to a range of banking services and tools to help founders manage their business finances more efficiently.
This includes access to online banking, payment solutions and services, overdrafts, and loans.
-It also provides founders with access to credit and security, which can be beneficial when it comes to securing investment
What is a digital current account?
A digital current account is a type of bank account that exists electronically and can be accessed online or through a mobile app. It functions similarly to a traditional current account, allowing you to deposit and withdraw funds, make payments, and check your balance.
What is the difference between a savings & a current account?
Savings accounts are for saving money and earn interest, while current accounts are for everyday transactions like paying bills. Savings accounts may limit withdrawals to encourage saving, while current accounts allow unlimited withdrawals but typically don't pay interest. In short, use savings accounts to grow your money and current accounts for easy access to your funds.
Who can open a current account?
In most cases, individuals, businesses and other organizations can open a current account, typically with the requirement of being 18 or older and having valid identification documents. The specific eligibility criteria may vary depending on the bank and the type of current account offered.
