What is Current Account?

Current Account

Are you going to start a business? Well, It is a great idea!!!

But before that, you need to know the basic requirements for running a business. And one of the major requirement while registering a firm is opening a business account which is known as Current Account.

Basically, there are two types of bank account, Savings Account, and Current Account. Today in this article we will understand about Current Account in detail.

In the year 2017, the total number of current and savings accounts was up to 157.1 crores, compared with 122.3 crores in 2015. This makes us understand that the business counts in India are growing rapidly day by day, and for such business, you will need to open a Current Account.

What is the meaning of Current Account?

Current Account is a bank account basically for the businesses or individuals who significantly carry out a higher number of daily transactions with banks. The current account holder can avail various facilities compared to the savings account holder. Even if the current account holder does not get any interest in most of the banks, but they can easily avail the overdraft facility. This type of account cannot be used for the purpose of investment or savings, but can only be sued for the purpose of running a business.

Eligibility for opening a Current Account

Most importantly a Current ACcount is opened by a business person, along with that there are some terms which conclude the eligibility of opening a Current Account.

• An individual

An Individual can open a Current Account unless and until he has all the required documents such as issued ID by the government, PAN card, Address proof, etc.

• Sole Proprietor

A sole proprietor is an owner of his own business and also known as a Sole trader, Entrepreneur, Proprietor. This type of business is owned by a single person and he itself run it without any legal entity. A sole proprietor is also liable to open a Current Account in India.

• Partnership firm

When a group of people come together and run a business are known as partners. They share the Profits and loss among themselves. Not only a single person is responsible for its profits and loss. Such type of Entity requires a Current account and it is liable to open it.

• Company

A company is a legal entity, this is made up of a group of people. Such firms are eligible for opening a Company.

• Trust

A trust is a legal entity that acts as a fiduciary, agent, or trustee on behalf of a person or business for the purpose of administration, management and the eventual transfer of assets to a beneficial party.

Advantages of Current Account

Compared to Savings account there is a number of Benefits for opening a Current Account in India. Below mentioned are few of the advantages of opening a Current Account.

• There are uncountable withdrawals allowed for a business person under Current Account.

• No restrictions applied on the deposits made in the current accounts opened at the bank’s home branch.

• For making a direct payment, cheques, pay orders or demand drafts can be issued by the current account.

• One of the most important benefits for the current account holder is that they can avail overdraft facilities.

• Once the Current account is opened business are offered with various other benefits such as:

• Withdrawal and deposit can be done from anywhere.

• No charges on inward remittance.

• Multi-location transfer.

• Limitless withdrawal can be done by a Current Account holder.

• Current Account holders provide internet and mobile banking for completing the business transaction with ease.

Features of Current Account

• Current accounts are best for business purpose and self-employed businesses.

• Minimum age to open a Current Account is above 18 years.

• Most of the banks do not provide interest to Current Account, but there are few banks who provide the facility of interest on Current accounts.

• No limit on daily transactions.

• The balance to be maintained in the current account is high compared to the savings account.

A current bank account is not only about saving money but it's also about managing money for your business. Opening a current account is a smart move for your business. It means that you can access a service that helps you control your money, and which may help you in the future.