Table of Contents
What is Current Account?
Current accounts are a type of bank account that is used by businesses for day-to-day financial transactions. 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.
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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:
Easy Access
A current account provides customers with easy access to their funds. This is because many banks offer debit cards, online banking and mobile banking services that make it easy to pay bills or withdraw funds from an ATM.
Higher Withdrawal Limits
They usually have higher withdrawal limits compared to other types of accounts, such as savings accounts. This means that customers can withdraw larger amounts of money at once or more frequently.
Bulk Payout Facilities
Banks and fintechs offering current accounts also have payout facilities that allow for direct debit from and to the customer.
These are usually offered with digital current accounts, like the ones powered by RazorpayX. Account holders can securely make bulk payments to customers, vendors or employees.
Learn More About Payouts
Overdraft
Current accounts typically come with an overdraft facility. This gives account holders access to extra money in their account when they need it, to cover unexpected expenses or to bridge a cashflow gap. This is especially useful for businesses that are just starting out.
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
Convenient Banking
Current accounts make business banking easier and more convenient. Account holders can quickly and easily make payments and transfers, deposit and withdraw money, and check their account balances. Unlike savings accounts, current accounts do not have any limits on number of transactions or volume of money transacted.
Business Growth
Businesses have very specific financial requirements, and current accounts are designed to fulfil these specific requirements.It is ideal for businesses, as it allows them to easily manage their finances, pay suppliers and employees, and accept payments from customers.
Separate Accounts
Business owners benefit greatly from separating personal and business finances – using the same savings account for both would result in confusion while filing taxes, accounting and even during daily operations.
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Monthly Average Balance Requirement for Current Account
The Monthly Average Balance (MAB) requirement for a current account can vary depending on the bank, the type of account, and the location of the account. Typically, banks require a higher minimum balance for a current account as compared to a savings account because of the higher number of transactions involved.
Read more: Minimum Account Balance – An Explainer
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
Explore RazorpayX
Current Accounts for SMEs, Startups, Mid-Market, Enterprises
In India, banks offer various types of current accounts to meet the needs of different types of businesses, including SMEs, startups, mid-market, and large enterprises. Here are some of the common types of current accounts:
Read more: A Guide to Types of Current Accounts
- Basic Current Account
- Regular Current Account
- Premium Current Account
- Foreign Currency Current Account
- Cash Management Current Account
- Trade Current Account
It is important to check with the bank of your choice for the specific types of current accounts they offer and the eligibility criteria for each type.
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.
Documents Required to Open a Current Account
The specific documents required to open a current account can vary depending on the bank and the type of account.
Read more: Checklist for Documents Required for Current Account
- KYC Documents
- Business Registration Documents
- Proof of Business Address
- Business PAN Card
- Other Documents
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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
