Table of Contents

• What is a Current Account?
• Who Should Open a Current Account?
• Key Features of a Current Account
• Benefits of Having a Current Account
• Types of Current Accounts
• How to Open a Current Account
• Documents Required to Open a Current Account
• Common Fees and Charges
• How is a Current Account Different from a Savings Account?
• Auto Sweep Facility
• Frequently Asked Questions (FAQs)
• Conclusion

1. What is a Current Account?

A current account is a type of deposit account provided by banks primarily to businesses, professionals, and entrepreneurs who deal with frequent and high-volume transactions. Unlike savings accounts, current accounts are designed for day-to-day money management rather than long-term savings.

These accounts generally do not earn interest, but they offer higher withdrawal limits, overdraft facilities, and other features ideal for commercial use.

2. Who Should Open a Current Account?

A current account is suitable for:

• Small and medium businesses (SMEs)
• Freelancers and consultants
• Startups and large corporations
• Sole proprietors and partnerships
• NGOs and Trusts (institutional accounts)

3. Key Features of a Current Account

Here are the primary features you’ll find in a typical current account:

• Unlimited Transactions: No cap on deposits or withdrawals.
• No Interest: Usually, current accounts do not accrue interest.
• High Minimum Balance Requirement: Banks often require a higher monthly average balance (MAB).
• Cheque Book & Debit Card: Offered for payments and transactions.
• Online & Mobile Banking Access: For quick fund transfers and monitoring.

4. Benefits of Having a Current Account

• Efficient Business Transactions: Helps manage payroll, vendor payments, and cash flow.
• Professional Image: Adds credibility to your business by separating personal and professional finances.
• Easy Record-Keeping: Useful during tax filing and audits.
• Access to Credit: Builds a relationship with the bank for business loans or overdrafts.
• Real-Time Banking: Most banks offer 24/7 online banking through mobile apps.

5. Types of Current Accounts

Different banks offer customised current accounts for varied needs. Common types include:

• Standard Current Account: Basic for daily business use.
• Premium Current Account: Higher withdrawal limits and added perks.
• Packaged Current Account: Comes with extra services (e.g., insurance, dedicated manager).
• Startup or Freelancer Account: Designed for new businesses or individual professionals.
• Foreign Currency Current Account: For businesses dealing in international trade.
• Institutional Current Account: For institutions such as Trusts, Associations & Societies.
• Special Purpose Current Account: Account for RERA, dividend payouts, estates & ESCROW purposes.

6. How to Open a Current Account

Opening a current account is straightforward, especially with the option to do it online. Here’s a general process:

• Choose the Right Bank and Account Type: Compare features, fees, and services.
• Gather Necessary Documents (see next section).
• Visit a Bank Branch or Apply Online.
• Submit Application Form & KYC Documents.
• Verification & Approval.
• Account Activation and Welcome Kit Issuance.

Many banks now offer same-day account opening for businesses with digital KYC.

7. Documents Required to Open a Current Account

Here are standard documents banks usually ask for:

For Individuals/Sole Proprietors:

• PAN Card
• Aadhaar Card (or other government ID
• Business registration certificate
• GST certificate (if applicable)
• Passport-size photographs

For Partnerships or Companies:

• PAN of the entity
• Incorporation Certificate
• Memorandum & Articles of Association
• Board Resolution (for companies)
• Partnership deed (for partnerships)
• Address proof of business
• KYC of all directors/partners

8. Common Fees and Charges

Before opening a current account, be aware of these charges:

• Minimum Balance Penalty: Charged if you don’t maintain the MAB.
• Transaction Charges: Beyond free transaction limits.
• Cheque Book Charges: For extra leaves.
• Overdraft Interest: Applied on overdrawn amount.
• NEFT/RTGS/IMPS Fees: May apply based on the bank’s policy.

Tip: Some banks waive many of these charges under business-friendly plans.

9. How is a Current Account Different from a Savings Account?

10. Auto Sweep Facility in Current Accounts

An Auto-sweep facility is a value-added banking feature that helps you optimise idle funds in your current account by automatically transferring excess balance into a linked deposit account (usually a fixed deposit). This feature is ideal for businesses that want liquidity with added interest earnings.

How It Works:

• You set a threshold (e.g., ₹1,00,000).
• Any amount above this limit is “swept” into a Fixed Deposit account automatically.
• If funds drop below the threshold, the required amount is “swept in” (transferred back) into the current account to maintain liquidity.

Benefits of Auto-Sweep Facility:

• Earn Interest on Surplus Funds: Unlike regular current accounts that don’t pay interest, the Auto-sweep facility ensures idle money earns returns.
• Maintains Liquidity: Funds are always available when needed.
• Automated Process: No manual intervention needed after setup.
• Better Cash Flow Management: Ideal for seasonal businesses or companies with fluctuating balances.

Not all current accounts offer this feature, so check with your bank about availability and terms.

11. Frequently Asked Questions (FAQs)

Q1: Can individuals open a current account?
Yes, if they have a business or are self-employed professionals.

Q2: Do current accounts earn interest?
Usually not. They’re meant for transactions, not savings.

Q3: What is the minimum balance required?
It varies by bank, typically ₹5,000 to ₹50,000 depending on the type.

Q4: Can I open a current account online?
Yes. Many banks now allow online application and eKYC.

Q5: Is GST registration mandatory?
Not always. It depends on your turnover and type of business.

12. Conclusion

A current account is essential for anyone running a business or handling frequent transactions. It simplifies cash flow management, offers flexibility, and enhances your business's credibility. By understanding its features and benefits, you can leverage the best current account offering to suit your professional needs.