Current Accounts (CA), extremely useful for facilitating business transactions that do not make it to the categories of savings or investments, are to be opened in the business name. Here’s how they work.
Regardless of whether you intend opening a current account for a partnership, proprietorship, company, trust, association, or the business operating in your own name, you can look forward to owning an account that facilitates easy and quick business related transactions. Take a peep at how this account works.
Essential Elements of Current Accounts
End Date / Maturity: Just like a savings account, your current account does not have any end date or maturity and can be used as long as you choose.
Rate of interest: Typically in the nature of non-interest bearing accounts, current accounts do not offer any interest on the huge transactions that take place on a day-to-day basis.
Flexi current accounts: Ideal for businesses with high seasonal requirements, most current accounts offer dynamic limits on cash deposits for reducing overall operational costs.
Number of transactions: Current account holders are allowed to carry out limitless business transactions through their accounts. Business accounts tend to have a larger number of financial transactions when compared to personal accounts. It is certainly a wise decision to open a current account that does not levy any fees/ charges after a stipulated number of financial transactions have been carried out.
Minimum balance: While there are certain banks in India that allow for zero balance accounts, in general, the minimum balance criteria serves to be higher in comparison to savings accounts. For instance, while some private banks may ask for Rs.25, 000 to Rs.75, 000 as their quarterly balance requirements, the public sector banks may start from Rs.1000. Obviously, the minimum balance requirement would vary in case of different locations and types of accounts.
Overdraft facility: In case you have a short term requirement for funds, you may withdraw an amount that is higher than the existing balance in your current account; however, there is a maximum limit on the permissible withdrawals. Once you deposit the amount back into your account, the overdraft so offered will be adjusted to reflect your actual balance. Remember, your bank will charge an additional interest on the amount withdrawn by you; which in effect, will be in the nature of a short-term borrowing.
Many kinds of transactions: Current bank accounts are beneficial for businesses that have high volumes of regular bank transactions, including withdrawals, deposits, and contra transactions.
Any time transactions: Oft referred to as a ‘Demand Deposit’ account, current accounts can be opened in commercial banks and co-operative banks in India. With smart deposit/ withdrawal facilities that can be availed at any given time (without the need of any notice), these accounts come in handy while making cheque based payments to creditors. Similarly, all received cheques can be deposited for collection without any fuss.
If there is anything else that you would like to know about the operations of your current account, just get in touch, we will be happy to help!