Types of Current Accounts

03^rd Feb 2025...

Published By : Team 811

Key Takeaways

A current account is designed for businesses, professionals, and organisations to handle frequent and high-volume transactions efficiently.
Eligibility extends to individuals, companies, firms, and entities like clubs or charities, with identity, address, and business proofs required.
Regular Current Accounts suit everyday business needs, while Start-up Accounts offer relaxed balance requirements for new ventures.
Global-Trade Current Accounts simplify international transactions with multi-currency and cross-border payment options.
RERA Current Accounts are mandatory for real estate projects, ensuring funds are used transparently and as per regulations.
Merchant Current Accounts cater to businesses managing daily payments, offering overdraft facilities and cash handling benefits.
ActivMoney Current Accounts automatically transfer surplus funds into Fixed Deposits, helping businesses earn interest without losing liquidity.

When managing finances, especially for those entering India's entrepreneurial or freelance world, understanding the various types of Current Accounts becomes very important. This blog aims to showcase the various current accounts available, focusing on how they cater to different needs, from bustling business owners to freelancers. Check out the various current account options to ensure you know the right banking choice.

Current Account Eligibility Criteria & Documents

Let's start by understanding who can open a current account and what documents you need. This helps ensure that everyone, from individuals to businesses, can manage their money smoothly with many transactions. Anyone running a business, big or small, like shop owners, companies, or even groups such as clubs or charities, can open a current account.

Preparing to open a current account involves gathering a set of important documents. These documents serve as proof of your identity, where you live, and, if applicable, the legitimacy of your business. Let's break down what each category means and why it's necessary:

Identity Proof: Banks need to know you are who you say you are. This is where your Aadhar Card or PAN Card comes into play. The Aadhar Card is a unique identification number issued by the Indian government to residents, containing biometric and demographic data. On the other hand, the PAN Card is a ten-digit alphanumeric identifier issued in the form of a laminated card by the Indian Income Tax Department to anyone who applies for it or to whom the department allots the number automatically.
Address Proof: A fixed address is important for any bank account holder. It's a way for the bank to confirm your location for correspondence and legal matters. This could be a recent utility bill (like electricity, water, or gas) showing your name and address or your rental agreement if you're living in a rented property.
Business Details: Proving the existence and legality of your business is essential for business owners or operators looking to open a current account. This could be through a registration certificate, which shows that the government recognises your business, or a GST certificate, indicating your business is registered under India's Goods and Services Tax (GST) system.

Exploring the Types of Current Accounts

When diving into banking for your business, knowing the right type of current account to open can feel like finding your way through a maze. Let's break down some specific types of current accounts that cater to different business needs, focusing on offerings that could be found in a bank like Kotak.

Regular Current Account: Consider this your go-to, everyday account for businesses of all shapes and sizes. It's the bread and butter of current accounts, coming with a few must-dos like keeping a certain amount of money in it all the time (that's your minimum balance), and, sadly, it doesn't earn you any interest on your balance. What it lacks in interest, it makes up for in perks like online banking and easy money transfers with RTGS/NEFT. Banks might have a few different flavours of this account type to fit your business needs.
Start-up Current Account: This one's for the new kids on the block. If you're just starting your business journey, a start-up current account is designed with you in mind. It gives you breathing room with the minimum balance requirement, so you don't have to worry about immediately keeping a large sum in the account. Plus, banks often offer extra services to help your start-up find its feet and start walking.
Global-Trade Current Account: Got your sights set on the international market? This account is for businesses that buy or sell goods or services across borders. It makes handling money in different currencies a breeze and offers specialised services to smooth out international financial transactions. Some banks might even offer accounts in various currencies to keep everything streamlined.
RERA Current Account: If real estate is your game, then a RERA current account is a must. This is all thanks to the Real Estate (Regulation and Development) Act of 2016, which makes this type of account a legal requirement. It's designed to keep homebuyers' money safe, with strict rules on when you can take money out, ensuring it's only after your project has received the thumbs-up from the experts.
Merchant Current Account: Especially tailored for businesses, the Merchant Current Account comes packed with features. Think free cash handling, quick online payments, and a fancy Business Platinum Debit Card, among others. It's designed to make managing your business's money as smooth as possible, from making deposits to handling cheques. And if you're looking to stretch your business's financial legs a bit, there's an overdraft facility waiting for you.
ActivMoney Current Account: For those looking to make their excess cash work a bit harder, the ActivMoney Current Account could be a game-changer. It takes your spare cash and, once you hit a certain limit, automatically tucks it away into a Fixed Deposit (FD), eyeing up potential interest of up to 7%. The best part? You can take from that FD whenever you need, without penalty for early withdrawal, making your money as flexible as it is industrious.

Current Account Interest Rates

Traditionally, current accounts do not yield interest due to their primary function of facilitating transactions. Nonetheless, several banks have started to introduce interest-bearing current accounts to remain competitive and appeal to a broader customer base.

Features: A shift from tradition, these accounts break the mould by offering interest on maintained balances, a perk previously limited to savings accounts.
Benefits: This feature enables businesses to generate additional income, making their operating capital work harder.
Kotak811 Innovations: Kotak811 acknowledges the transactional nature of traditional current accounts and their non-interest-bearing status. To add value for its customers, Kotak811 has implemented the Auto Sweep facility. This service automatically transfers excess funds into a Fixed Deposit, ensuring that your balance earns interest at rates comparable to savings accounts, thus maximising your financial returns.

Current Account Fee and Charges

Checking current account fees and charges is important for anyone looking through the financial dilemma to choose the right account. These fees can significantly impact your overall banking costs, varying widely across different banks and specific account types, affecting your operations' financial efficiency. Some of these common fees encountered include:

Monthly Account Maintenance Fees: A periodic charge for account upkeep, applicable even if the account is not actively used.
Transaction Charges Over the Free Limit: Fees incurred for transactions exceeding the number of free transactions allowed monthly.
ATM Withdrawal Fees for Other Bank ATMs: Charges for using ATMs of banks other than the account holder's, especially relevant for cash withdrawals.

Remember, the right current account can be a gateway to efficient business transactions, streamlined operations, and even financial savings. Thus, take your time, assess your needs, and choose wisely. Should you have any more questions, Kotak811’s customer service is always there to assist you, making your banking experience as smooth and hassle-free as possible.