4 Components of Current Account that You Need to Know
Current bank accounts are primarily designed for businesses, professionals, and individuals who carry out frequent transactions. These accounts are different from savings accounts in many ways and offer a host of benefits that can help businesses manage their finances effectively. Also, a business or an individual can easily open a current account online. Here are four components you should know about current bank accounts-
To open a current account in India, you need to fulfill certain eligibility criteria. The minimum age limit to open a current account is 18 years. Individuals, sole proprietorship firms, partnership firms, limited liability partnerships, private and public limited companies, trusts, societies, and associations can open current accounts. However, the eligibility criteria may vary from bank to bank, and you should check with your preferred bank before applying for a current account.
Features and benefits
Current bank accounts offer several features and benefits that can help businesses manage their finances efficiently. Some of the key features and benefits of current bank accounts are:
- High transaction limits
Current accounts have higher transaction limits compared to savings accounts, allowing businesses to carry out more transactions without incurring any penalties.
- Overdraft facility
Current accounts come with an overdraft facility that allows businesses to withdraw more money than they have in their account. Overdrafts are useful when businesses need urgent cash flow to meet their working capital requirements.
- Online banking
Most banks offer online banking facilities for current accounts, enabling businesses to carry out transactions from the comfort of their office or home.
- Free cheque book
Current accounts come with a free cheque book, allowing businesses to make payments easily.
- Cash management services
Banks offer various cash management services to their current account holders, such as cash pickup, cash delivery, and cash deposit, making it easy for businesses to manage their cash flow.
- Relationship managers
Banks assign relationship managers to their current account holders, providing personalized services and assistance.
- Interest-free account
Current accounts do not earn any interest on the balance maintained in the account. However, some banks offer a sweep-in facility that automatically transfers the surplus balance from the current account to a linked savings account, which earns interest.
Fees and charges
Current bank accounts come with fees and charges that vary from bank to bank. Some of the common fees and charges associated with current accounts are:
- Minimum balance requirement
Most banks require a minimum balance to be maintained in the account. Failure to maintain the minimum balance can attract penalties.
- Transaction charges
Banks charge transaction fees for carrying out transactions such as cash withdrawals, cheque deposits, and fund transfers.
- Overdraft charges
Banks charge interest on the overdraft amount availed by the account holder.
- Cheque book charges
Banks charge a fee for issuing a new cheque book or stopping a cheque payment.
- Account maintenance charges
Banks levy a monthly or quarterly account maintenance charge on current accounts.
- Non-maintenance charges
If the minimum balance is not maintained in the account, then banks levy non-maintenance charges.
To open a current account in India, you need to submit certain documents. The documents required may vary from bank to bank, but some of the common documents required are:
- PAN card
Permanent Account Number (PAN) card is mandatory for opening a current account.
- Identity proof
Any valid government-issued identity proof such as Aadhaar card, driving license, or passport can be submitted.
- Address proof
Any valid government-issued address proof such as Aadhaar card, utility bill, or rental agreement can be submitted.
- Business proof
Depending on the type of business, certain documents such as GST registration certificate, trade license, or partnership deed may be required.
In conclusion, current bank accounts offer many benefits to businesses, professionals, and individuals who carry out frequent transactions. They provide a range of features such as high transaction limits, overdraft facilities, online banking, and cash management services, among others. However, it is important to carefully evaluate the fees and charges associated with these accounts before opening one. With the right account, businesses can manage their finances efficiently, and with the right bank, they can access personalized services and assistance from their relationship managers. Therefore, it is essential to choose a bank that suits your business needs and financial goals.