A current account is a vital banking account for individuals and businesses with frequent financial transactions. Current accounts offer high transaction limits, unlimited withdrawals, and easy access to funds. 

Read on to find out:

• Features and benefits of current account
• Types of current accounts
• Minimum balance required to be maintained in a current account
• Opening process and documentation required for current accounts

What is Current Account - Definition & Meaning

A current account is a type of bank account which provides high transaction limits for cash deposits and withdrawals. It is particularly tailored to suit the requirements of businesses, professionals, and entrepreneurs who make several financial transactions on a regular basis. They do not earn any interest, unlike savings account. 

Features and Benefits of Current Account

There are several features and benefits of a current account, which are discussed in detail below:

Features of Current Account 

• Opening a current account is essential when starting a registered business. A key feature of a current account is that it allows transactions beyond the limits set for savings accounts.
• The minimum balance required for a current account is higher than that of a savings account. Failure to maintain this balance may result in penalties or fines.
• Individuals, partnerships, private and public companies, trusts, and associations can open and operate current accounts.
• Businesses can access short-term loans through a current account, but interest will apply to the borrowed amount.
• It facilitates account holders to make regular deposits and withdrawals of huge amounts of money in the city and outside the city.
• Companies can obtain an overdraft depending on their transactions, books of accounts, and average balance.

Benefits of Current Account 

• A current account facilitates companies to make big payments or receipts in a smooth manner.
• Account holders can make unlimited withdrawals, though transaction fees may apply for cash withdrawals.
• Current accounts can be accessed from any location, not just the home branch, with a small fee for deposits made outside the branch's location.
• Current accounts facilitate direct payments through pay orders, cheques, and demand drafts.
• Business-related current accounts come with benefits such as cash deposits and withdrawals at multiple locations, free inward remittances, and multi-location transfers.
• Current accounts help creditors assess the creditworthiness of the account holder.
• This type of account helps to assess actual profit and loss.

Types of Current Account

The following are the different types of current accounts:

Standard Current Accounts

Standard current accounts are the most prevalent and involve account holders keeping a minimum average balance every month. They do not earn interest, but they provide a range of features such as Netbanking, SMS banking, debit cards, overdraft facilities, free RTGS and NEFT service and chequebooks.

Premium Current Accounts

Premium current accounts offer exclusive features and benefits for high-worth individuals and businesses, like high transaction limits, more cheque leaves, free collection of RTGS and NEFT, etc.

Packaged Current Accounts

The packaged current accounts stand in between the premium and normal current accounts. Better than the normal accounts, a packaged current account provides advantages such as travel insurance and medical assistance to the account holders; however, these accounts may not be as customer-centered as premium accounts. 

Startup Current Accounts

This current account is for startup and small business entities in India. This type of account helps their requirements with features and benefits for their growth and financial management. It offers path-breaking features like lower balance requirements, easy processes to open accounts, and lower transaction fees, especially relating to the early period. 

Merchant Current Accounts

Merchant current accounts assist businesses with an online presence, i.e., businesses on e-commerce websites or through websites. These accounts provide facilities like low-cost transfer facilities, reduced charges for cash deposits and withdrawals, etc., enabling businesses to make transactions through point-of-sale (POS) terminals or online payment gateways.

Foreign Current Accounts

Foreign current accounts are for companies that need help with inward and outward remittances. They are most beneficial for hassle-free foreign transactions. The other facilities of this account are identical to a regular current account.

Current Account Minimum Balance​

The Minimum Account Balance (MAB) requirement for current accounts differs from one bank to another, from type to type, and from location to location. Some banks may also have a zero-balance current account option for selected customer categories, such as for startups or small businesses.

Here is a list of some top banks, along with their monthly minimum balance:

It is important to remember that a failure to maintain the minimum MAB can incur penalties, and these may go from a modest fee to a percentage of the balance shortfall. The specific penalty will be according to the policies of the bank and the terms and conditions of the account.

Example of Current Account 

Assume XYZ Enterprises is a small company that requires a bank account to maintain everyday operations, such as receiving payments from customers, paying suppliers, and administering payroll. Owing to the fact that the business needs regular deposits and withdrawals, a current account is the best option for them.

Current Account Interest Rate

Current accounts do not provide interest rates on an account. They are meant for frequent transactions and do not offer interest on the balance maintained in the account. However, some banks may offer minimal interest on current accounts, depending on their policies.

Who Can Open a Current Account​?

Various entities can open a current account, which is as follows:

• Individuals
• Sole Proprietorships
• Hindu Undivided Family (HUF)
• Partnerships
• Trusts, Associations, Societies, Clubs, and similar organisations
• Limited Liability Partnerships (LLP)
• Company

It is important to note that the eligibility requirements can differ based on the bank and the specific type of current account available. 

How to Open a Current Account Online​?

You can open current account online by following the below process:

• Visit the official website of your preferred bank and download the form for opening a current account.
• Complete the form with accurate personal information, bank account details, and any other required sections.
• Visit the nearest branch of the bank to submit the printed form along with the required KYC documents.

Alternatively, you can go to a nearby bank branch, collect the form from the appropriate department, and submit it with the necessary documents.

Documents Required for Current Account

To open current account online​, here is a list of documents you need to provide:

• Individual or Business PAN card
• Proof of address, such as Voter ID, Aadhaar card, Passport, etc.
• For companies or trusts, a Memorandum of Association (MoA) or certificate of incorporation
• A partnership agreement, along with ID proof and residential proof for each partner, in the case of a partnership firm
• Proof of communication address if the current account holder is a company

How to Close a Current Account​?

Follow the process below to close a current account:

• Get in touch with the bank’s customer service or visit the bank branch and notify them of your decision to close the account.
• Submit any required forms or identification as per the bank’s guidelines.
• Make sure all fees or pending charges linked to your account are cleared.
• Ask the bank for a written confirmation that your account has been successfully closed for your records.

Which Bank is Best for a Current Account?

The best bank for a current account is determined by your individual needs. It is worth comparing different aspects, including minimum balance, transaction limits, transaction charges, overdraft facilities, and accessibility, to determine the bank that suits your financial activities the most.

Current account is necessary for people and businesses involved in large volume transactions and need flexible banking services. With all its advantages, current accounts simplify financial management. By opting for the proper bank and type of account, you can simplify your financial processes and have easy day-to-day transactions.

Related Articles:
1. What is Savings Account?
2. What is Salary Account?
3. Best Zero Balance Account Opening in India
4. Differences Between Current Account and Savings Account