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What is current account? How to Open Current Bank Account?

What is current account

Current Bank Account Meaning

Current account is mostly used by businessmen, who need to do more transactions. Through this facility provided by the bank, there has been a reduction in the problems faced in the transactions, because this facility provided by the banks has reduced the additional pressure on the business people due to the transaction and the transaction process has been simplified. has been made. In this article, we are going to tell you about how the beneficiary will get this facility and its benefits and some other similar details. 

what is current account? How to Open Current Bank Account?

What is current account? (What is Current Account?)

What is current account?

Current account, also known as transactional account, is a bank account with no specified daily transaction limit. These accounts neither serve the purpose of investment, nor earn any interest on the amount kept in these accounts like a savings account. Current accounts are commonly used by professionals, small businesses and entrepreneurs.


Depositing, withdrawing money etc. are included in the current account. Current account can be opened in any co-operative and commercial bank. This account has the advantage over the savings account that we can withdraw or deposit money from the bank without giving any prior notice to the current account. Current account in India can be opened from Rs 5,000 to Rs 25,000



Why is current account important? (Current Account Importance)

Current account is very popular in public enterprises, company, firms etc. The main reason for its popularity is that there are regular transactions in these institutions and in such a situation, savings account is not able to work easily for such works, so we need a current account. Current account is like a zero account, in which there is no limit to how much transactions can be done and that is why the importance of current account increases so much. No other account is able to function so smoothly. The cost of transactions in this account is high and it is also not predetermined how many times the transaction will happen in a month. That's why current account is very important for businessmen.





Who needs a current account? (Who Need Current Account)


The biggest need of current account is for big businessmen, private and public traders, firms, etc., who need to do large amount of transactions simultaneously and regularly. In this case, no other account can handle such transactions. That's why the banks have given the facility of current account to the traders, so that the large amount of transactions can be made easier.




Current Account Features and Benefits

The purpose of current account is to enable business people to transact easily without any hassle. If you have to pay more money for any of your work, then you can easily do it from the current account. 


Any amount of transactions can be done in the current account without any hindrance


Current account in India can be opened in banks for Rs 5,000 to Rs 25,000. Its cost is more than savings account i.e. current account is opened in more rupees than savings account


There is a provision to keep minimum money in the current account. If you have less than the minimum balance in your current account, you will have to pay a penalty.


There is no minimum limit for transactions in current account. This service provided by the banks has increased the popularity of this account. You can transact any number of times in your current account


If you need to withdraw more than a certain amount in a day, you can withdraw as many times as you want by paying some extra charges.


Earlier there was overdraft facility only in savings account, but now you can use overdraft facility in current account also, according to which you can withdraw more money than the amount deposited in your account.


Now some banks have started giving interest facility on the amount deposited in the current account.


Merchants can directly do transactions through cheques, drafts etc. from this account. With this service, the barriers to transactions in business have been reduced.



You can also keep your current account running forever. There is no prescribed time limit for maintaining a current account.


Through this account, a person can also deposit money in his account from any other branch of his bank by paying some nominal charges.


We can do transactions in current account from our mobile phone also. If you have to do any important transaction or a situation has arisen like doing transactions at night, banks are closed at that time.







Difference Between Current Account and Savings Account



Savings Account Current Account Both do not match each other, there is a lot of difference between them. Both the accounts take care of our financial needs in a different way. Money is managed in different ways in both the accounts.


Use :

Savings account is used to save money so that a person can save some part of his income, while current account is used for transactions of high volume on a regular basis.


Beneficial for:

Savings account is beneficial for people who have regular income and who save money for a specific purpose like marriage, going on vacation or buying a car or motorcycle, while current accounts The advantage of direct business people, firms etc. who need more transactions.


Monthly Transaction :

There is a limit in the savings account that we can transact only so many times in a month. You are allowed 3 to 5 transactions in a savings account and if you do more than that, you have to pay a fee, whereas in a current account, there is no limit on how many times you can do transactions in a month because The purpose of current account is to promote more transactions.



Interest :

In savings account you get 4 to 6 percent interest and it is pre-determined. This is possible because the limit of transaction is set in the savings account, while there is no limit of transaction in the current account, then banks do not pay any interest for this, but now some banks have started paying interest on the current account as well. Is.


Minimum amount deposited in the account:

The minimum amount is the amount that should be in your account, so that your account runs properly without any hindrance. Therefore, this amount has to be kept more in the current account than in the savings account.




Difference Between Current Account and CapitalAccount

The current account monitors the supply of goods and services in trade, while the capital account monitors capital transactions in the economy.


The extent of capital account is more than that of current account because in capital account investment of capital, expenditure as well as information about investment made by public people and company has to be kept.


The current account looks at a country's imports and exports while the capital account looks at the country's investments.




Current Account Disadvantages

You have to maintain more than the required balance for the account. And in such a situation, the holder does not get any interest even after keeping more amount in the bank account, then it is the biggest loss for his capital.


The process of opening a current account is very difficult and long. Current account is more burdensome on the individual as you have to pay a lot of charges.


In the current account, there is a fixed limit for the transaction of money in a day. If you want to transact more than this, then you will have to pay extra charges.




How to open current account? (How to Open a Current Account?)

As we all know that current account is used by the businessmen so that the transactions can be done easily for the businessmen. That's why banks provide many facilities to the holders for current account such as no maximum transaction limit and easy transactions from other branch of the bank. We can keep the current account regular according to the need of our business. For this we only have to deposit our minimum amount in the bank. Below are the steps to get you a current account open:


Before opening a current account, check your eligibility, because many banks check for opening a current account, why do you have to open a current account? Like you have to open current account for public or private business or for any firm?


After this, you can download the form for opening a current account from the bank's website or fill it by taking the form from your nearest bank. Fill all the information asked in that form correctly.


And finally pin all the papers with the form, and submit it to the bank.





Current Account Required Documents

To open a current account in the bank, it is necessary that you keep some documents with you.


First of all you must have proof of your business what kind of business is yours? Like is it a private business or a public one? Do you do any big business or are you in a firm?


If you want to open a current account in the bank, then it is mandatory to give the permanent address of your business. This is not a big task because if you have your own business then there should be no problem in submitting its address.


Nowadays KYC has been made mandatory. That's why you have to get kyc done to open a current account. This is a simple process and will be completed in no time.


If you do business then you must be paying income tax also. To open a bank current account, you will have to submit all your income tax documents.


Along with this, to open a current account, a person has to take authorization from some special institutions.


To open a current account, attach all these documents along with the form and submit it to the bank. After the whole process, the bank itself will inform you that your current account has been opened in that bank and you can take advantage of it.



Who can open a Single Current Account?

Current account facility is generally available to those people who are involved in some or the other business. To open this type of account, you need documents like Certificate of Incorporation, proof of address of the firm or company and your PAN card. Many banks also insist on GST registration number. Following the new rules, customers who have not availed any credit facilities from the banking system and have an exposure to the banking system of less than Rs 5 crore can also open a current account. However, while doing so, banks may ask such customers to give an undertaking that they will inform the banks if the credit availed by the borrower from the banking system crosses Rs.5 crore.


Why this new norm?

It has been observed that many borrowers, to whom banks had lent money through cash credit (CC) or overdraft (OD) facilities, were transferring the borrowed funds to their current accounts with other banks. This was not a proper approach from the banking regulator's point of view. RBI has tightened the norms to curb the practice of opening new current accounts by borrowers outside the consortium of lenders, especially when under stress and switching from one bank to another. Funds are diverted in the bank. RBI in its circular has said that "no bank shall open current account for customers who have availed credit facilities in the form of cash credit (CC) / overdraft (OD) from the banking system and all transactions shall be carried out through CC/OD account". Will be done through


Which current accounts would it cover?

This will impact the current accounts of borrowers who have availed CC/OD facility from other banks. The Bank will send a notice informing you about the same. Also, if you have availed CC/OD facilities and transferred those funds to your current account then your account will be affected. If you already have a current account and have not availed any CC/OD facility, your account will not be closed.




What happens to the money kept in the account if it is closed?

Most banks have frozen current accounts that did not comply with the new guidelines. With a view to mutual settlement, banks may reopen and make these accounts operational for the customers. In case of closed accounts, they cannot be reopened but the customer can withdraw the amount kept in it.

If the current account is frozen or closed, the funds in the account can be transferred to the borrower's savings or CC/OD account. You have to visit the branch where you have your account, and then request the bank to transfer money by filling up the application form. The bank can either RTGS to the above account or provide a demand draft in the name of the firm, or transfer the amount to your CC/OD accounts. In some cases, you can also get it in cash if the amount in the current account is too small (however, it depends on the bank and your relationship with the bank). To ease the process it is important that you keep your KYC details ready for verification.



What does the requirement of 10% credit exposure in the new regulations mean?

This means that out of the total credit exposure of the customer in the banking system, if the exposure to any lender is 10% or more, the debit facility will be available to the CC/OD account opened with that particular bank. For example, if you have taken a loan of Rs.5 crore from various lenders. Suppose only one of these Lender 'A' has given you a loan of Rs.50 Lakhs (10% of the total loan) or more, you can avail debit facility only from the CC/OD account opened with Lender 'A'. can do.


If there is more than one bank having 10% or more exposure to the banking system of that borrower, the bank to which the funds are to be remitted may be decided between the borrower and the banks. Further, it may be noted that where a bank's exposure to a single borrower is less than 10% of the banking system's exposure (to that borrower), credit to the CC/OD account would be permitted in full, but this CC/OD account would be fully permitted. The debit to the OD account will be made only for credit to the CC/OD account of the borrower with a bank whose exposure to the borrower is 10% or more of the exposure to that borrower.



Conclusion

By July 31, most of such current accounts were frozen but not closed. After extending the deadline, banks will now talk to their customers about the migration path to the new regime. Most banks will try to resolve these issues mutually by talking to their customers. The accounts which have been frozen can now be reopened and made operational as RBI has extended the date of implementation (of these rules).


Many people have got benefit from current account. The traders who were earlier troubled by the transaction process of banks, now they do not have to face any kind of problem. Earlier, businessmen could not transact large amounts of money at the same time and were able to transact only a certain number of times in a month, but now with the help of current bank accounts, merchants can pay money innumerable times according to their needs. can do. The process of opening a current account is a bit difficult, but once the current account is opened, its benefits can be enjoyed.




FAQ People also ask

Q : If we want to open individual current account can we open?

Ans: Yes, current account can be opened by you as an individual, in partnership with a firm, for a private or public company, a special association, a society or a trust, etc.


Q: Can we convert the savings account to current account?

Ans : No, there is no such provision that you can transfer any account in the bank. If you do not want the savings account, you can close it and open another current account.


Q: What is the minimum amount required to be in the current account?

Ans: When you go to the bank to open a current account, you have to take at least Rs 10,000 to the bank to deposit it in that account.


Q: Does current account come under income tax?

Ans : No, a merchant can do cash transactions from his current account without any limit as well as without paying any tax.


Q: Is Salary Account only Current Account?

Ans : No, Salary account is not a current account but it can be considered as a savings account as it has your salary credit and we don't need to maintain minimum balance


Q: Which is the most suitable account for business?

Ans: Who needs a current account (Who Need Current Account) The biggest need of a current account is for big businessmen, private and public traders, firms, etc., who need to do large amounts of transactions simultaneously and regularly. it occurs. So no other account can handle such transactions


Q : How to open NRI account?

Ans: Opening an NRE account is also easy. Banks provide online facility for this. The form has to be filled on the bank's portal. After taking its print and self-attesting the necessary documents, the account is opened by couriering it to the address of the bank in India.


Q: How much money can be kept in the current account?

Ans: A balance of Rs 5,000 has to be maintained in the current account. Every person who has valid KYC can open a current account in SBI. In this, the first 50 check book is available for free. -Mobile banking, internet banking, free ATM cards are also given for the first year.


Q: What is required to open a bank account?

Ans: Documents required to open a bank account. (Documents Required to Open An Account With a Bank)


  • Three passport size photos

  • Aadhaar Card

  • Driving License

  • Voter ID Card

  • Electricity Bill

  • Telephone Bill


Q: Which is the best bank for current account?

Ans : ICICI Bank Business Banking offers a wide range of Current Account products for your regular business transactions. These products are best suited for small retailers, traders, self-employed professionals and other such businesses with an annual turnover of less than 2 crores.


Q: What do you understand by trading account?

Ans: The account prepared by a businessman to get information about gross profit or gross loss from business within a certain period is called business account or business account. So in this way, the meaning of trading account is such an account from which gross profit or loss is known by the purchase and sale of goods.

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