Understanding Current Accounts for Business
A current account is the foundation of business banking in India. Unlike savings accounts designed for individuals, current accounts cater specifically to businesses, companies, trusts, and other entities engaged in commercial activities. They offer unlimited transactions, overdraft facilities, and specialized services essential for business operations.
Choosing the right current account can significantly impact your business efficiency and costs. With numerous banks offering varying features, charges, and digital capabilities, understanding the nuances of each offering helps businesses make informed decisions that align with their operational requirements and growth plans.
Current Account vs Savings Account
- Interest: No interest on current account balances vs 2.5-4% on savings
- Transactions: Unlimited in current vs limited free transactions in savings
- Minimum Balance: Higher for current accounts (₹5,000-₹2,00,000)
- Overdraft: Available in current accounts vs not available in savings
- Eligibility: Businesses, companies, trusts vs individuals only
Key Features of Current Accounts
Transaction Capabilities
Unlimited cash deposits and withdrawals at home branches, free NEFT/RTGS through digital channels, bulk payment facilities for salaries and vendor payments, and integration with payment gateways.
Overdraft Facility
Most current accounts come with pre-approved overdraft limits, providing emergency funds when needed. Interest is charged only on utilized amounts.
Digital Banking
Internet banking with maker-checker workflow, mobile banking apps, API banking for ERP integration, virtual accounts for collection management, and real-time transaction tracking.
Trade Services
Letter of credit issuance, bank guarantees, foreign currency transactions, export-import documentation, and trade finance facilities.
Major Banks Comparison
| Bank | Min Balance | Free Cash Deposit | Best For |
|---|---|---|---|
| SBI | ₹5,000-₹50,000 | ₹50,000-₹5L/month | Wide network, low charges |
| HDFC Bank | ₹25,000-₹1L | ₹2L-₹10L/month | Digital banking, urban businesses |
| ICICI Bank | ₹25,000-₹1L | ₹2L-₹10L/month | Trade finance, forex services |
| Axis Bank | ₹10,000-₹50,000 | ₹50,000-₹5L/month | Forex, startup accounts |
| Kotak Bank | ₹10,000-₹50,000 | ₹1L-₹5L/month | Innovation, digital features |
Understanding Account Charges
Current account charges vary significantly between banks and account types. Understanding these charges helps businesses optimize costs:
Monthly Average Balance (MAB)
MAB is calculated by dividing the sum of closing balances for each day by the number of days in the month. Non-maintenance attracts charges of ₹500-₹1,000 per month.
Cash Handling Charges
- Free Limit: ₹50,000-₹5,00,000 per month at home branch
- Beyond Free Limit: ₹2-₹5 per ₹1,000
- Non-Home Branch: ₹50-₹150 per transaction
Other Common Charges
- Cheque Book: ₹2-₹5 per leaf beyond free limit
- Demand Draft: ₹25-₹500
- Cheque Bounce: ₹200-₹500
- SMS Alerts: ₹5-₹25 per quarter
- Account Statement: ₹50-₹200
Documents Required for Opening
For Private Limited Company
- • Certificate of Incorporation
- • MOA and AOA
- • Board Resolution authorizing account opening
- • PAN of company and directors
- • Identity and address proof of directors
- • Registered office address proof
For Partnership/LLP
- • Partnership deed/LLP Agreement
- • Registration certificate
- • PAN of firm
- • Identity proof of partners
- • Authorization letter signed by all partners
For Proprietorship
- • PAN of proprietor
- • Business registration proof (GST, Shop Act)
- • Address proof of business
- • Proprietorship declaration
How to Choose the Right Account
Assess Your Transaction Pattern
Estimate monthly cash deposits, withdrawals, and digital transactions. Choose an account with free limits matching your pattern.
Consider Digital Banking Needs
If you process many online payments or need ERP integration, prioritize banks with advanced digital platforms.
Evaluate Branch Network
For businesses handling cash, proximity to branches matters. For digital-first businesses, network is less critical.
Check Trade Service Requirements
Import/export businesses need banks with strong trade finance capabilities and competitive forex rates.
Digital Banking Features
Modern current accounts offer sophisticated digital capabilities:
Payment Solutions
- • UPI for business
- • Bulk NEFT/RTGS
- • API banking
- • Virtual accounts
Security Features
- • Two-factor authentication
- • IP whitelisting
- • Maker-checker workflow
- • Transaction alerts
Conclusion
Selecting the right current account is a crucial decision that affects your daily business operations and costs. Consider your transaction volume, cash handling needs, digital requirements, and growth plans when comparing options.
Don't just look at the minimum balance requirement—calculate the total cost of ownership including transaction charges, cash handling fees, and value-added services. Build a strong relationship with your banker to negotiate better terms as your business grows.
Pro Tip: Review your current account annually to ensure it still meets your needs. As your business evolves, you may benefit from upgrading to a premium account or switching to a bank with better digital capabilities or lower charges.