A current account is meant for professionals, businesses, associations, trusts, societies, institutions, etc. It provides account holders with a wide range of benefits compared to a savings account, making it a convenient account choice for businesses, traders, professionals, and institutions.
Businesses usually do not prefer to have a regular savings account since it has many restrictions and limitations. Entrepreneurs open a current account as it has no transaction limits and helps them to maintain liquidity.
Importance of Opening a Current Account For a PLC
After a Private Limited Company (PLC) is incorporated, it receives a PAN number. The PLC needs to open a bank account in the company name after receiving the PAN number. Though opening a current account is not mandatory, it is better to open a current account in the company name as it has a separate legal entity.
The company transactions should be done in the company’s current account rather than any director or promoter’s personal or business account. The company’s current account will help to differentiate the business finances from the personal finances of its directors or promoters. A PLC can even have more than one current account.
Since the company is recognised as a legal person under many acts and laws in India, the current account of the PLC is required for tax purposes, transactions with its creditors and debtors, payment of salaries and dividends, legal proceedings against the company, settling accounts at the time of liquidation, etc. It adds to the reliability and credibility of the company’s financial transactions as the current account will be in the company name.
Process of Opening a Current Account by a PLC
The process of opening a current account by a PLC is very simple, which is:
- Visit the bank branch or online website of the bank in which the current account of the company needs to be opened. Many banks have a provision for opening a current account online.
- Select the ‘Business Current Account’ option on the bank website, choose the type of current bank account after going through its features, click on the ‘Apply Now’ button and fill the application form. The application form for the current bank account can be obtained offline by visiting the bank branch and filled physically.
- After filling the application form for opening the current bank account, submit it by clicking the submit button (if it is filled online on the bank website). The filled application form for opening the current bank account must be submitted to the bank branch (if it is filled offline by getting the application form from the bank branch).
- After the application form for opening the current bank account is submitted, a customer care executive from the bank will contact the company to complete further formalities.
- The company must submit the required documents for opening the current bank account.
- After the KYC verification, the bank will open the current bank account in the company name.
Documents Required to Open a Current Account by a PLC
The documents to be submitted to the bank for opening the current bank account are:
- Certificate of Incorporation of the PLC.
- Memorandum of Association (MOA) and Articles of Association (AOA) of the PLC.
- Resolution by the Board of Directors to open a current account and appointment of the authorised person to open and operate the current bank account.
- Power of attorney granted to the company officers, employees, and managers to transact the business on the company’s behalf.
- DIN (Directors Identification Number) of the directors of the company.
- PAN card of the PLC.
- An updated list of directors as per the bank format.
- Registered address proof of the PLC, such as
- The latest copy of electricity or telephone bill, not more than three months old
- Registration copy of firm with the Employee Provident Fund Organization (EPFO) or Employee State Insurance Corporation (ESIC)
- Any other government registration/license having the company address.
- ID proof of all the directors and the authorised signatories, such as:
- PAN card of director
- Voter ID card
- Driving license
- Adhaar card.
- Proof of the appointment of the current directors in case of a change in directors.
- Proof of the resignation of the directors in cases where the Board changes.
- Shareholding pattern of the PLC as per the bank format.
- Beneficial owner information, if any.
Benefits of Having a Current Account by a PLC
- The bank provides the current account holder, i.e. PLC, with an overdraft facility that helps meet the working capital needs of the business.
- There is no restriction on minimum transactions for the current account holder.
- The current account helps in organising business transactions and helps in the taxation process.
- The current account holder will get credit card transactions tools and online banking support.
- The current account holder will get restriction-free deposits and withdrawals to meet the cash needs of the business.
- A higher number of free cheques are available per month.
- A current account allows convenient transfers and deposits in different branches, making it convenient to collect payments from small customers.
- Current accounts do not earn any interest, unlike recurring deposits, savings accounts, etc., and the charges for the same are usually high.
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