What is a Current Account - Meaning, Definition, & Features

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For businessmen and entrepreneurs, the current account is not just a banking service but a game changer. It is a go-to tool for commercial financial activities, expediting transactions and simplifying finances. A current account gives you access to several methods to make your banking experience smooth and effective, regardless of whether you handle business finances or trading expenses.

Empower your business with Kotak811 Current Account, as it requires no minimum balance for your current account and offers same-day settlements for your business. Let’s Learn about the current account, its meaning, definition, and features.

What is a current account?

A current account is a type of bank account that gives you a platform to manage your everyday financial transactions. It is the one-stop shop for daily payments, simplifying depositing, withdrawing, and transferring money. Current accounts allow you to manage your finances easily and are frequently used for personal and corporate purposes.

Various entities, including sole proprietorships, private and public limited businesses, insurance companies, mutual funds, educational institutions, and stock and share brokers, can open current accounts, also known as financial accounts.

Top Features of Current Account

Current accounts form the core of one's corporate financial management. While facilitating routine transactions. Below, we have discussed key features that elevate current accounts beyond mere payment settlements:

Effortless Banking

Your Current Account is your one-stop shop for all your business needs, with no daily transaction restriction. Whether it's an instant money transfer through RTGS or NEFT, online transactions, or a multi-city fund transfer that allows you to withdraw or deposit money from any bank location. Demand drafts and cheques are not subject to additional charges.

Alerts via SMS and email

Ensuring fund security is paramount for businesses. Current accounts equip treasurers with instant alerts on all activities. SMS/email notifications are triggered in real-time, apprising users of inward/outward movements. Tailored alert setups intimate selectively on large-value transactions.

With a mobile work culture, treasurers access such alerts remotely, exercising oversight. Timely alerts detect unauthorised activity, facilitating quick dispute raising. During travels, executives evaluate positions through notifications, exercising informed decisions. Jointly, alerts strengthen control of liquid assets in today's digital ecosystem.

Overdraft facility

Business cycles render cash flows unpredictable at times. Meeting temporary cash crunch is business critical. Current accounts ease such tensions through agreed overdraft limits. Pre-approved non-fund-based credits offer a temporary lifeline to tide over mismatches.

The optimal limit is blocked factoring operations, preventing ad-hoc costs. Tenured relationships aid higher unsecured buffers. Overdraft sustains until receivables materialise without disrupting the supply chain. This positions current accounts as a one-stop solution for savings and emergency credit needs.

Easy access and high liquidity

Given the cash-intensive nature of industries, immediate fund access via multiple channels, including cheques and cards, is paramount. Current accounts empower swift withdrawal from the company's location or overseas subsidiaries, leveraging a global network.

Debit cards enable procurement payments seamlessly. With liabilities settling on presentation, current accounts' liquid corpus supports meeting statutory obligations timely without raising short-term loans. A high liquidity bench also positions businesses to capitalise on emerging opportunities promptly.

No interest earnings

While current accounts forego interest income, they achieve strategic goals. Operating balances are maintained primarily for facilitating receipts and payments rather than parking surpluses. Earnings forgone are offset through credit days extracted from vendors and enhanced working capital cycles.

Large enterprises optimise between savings and current accounts basis priorities. Current accounts emerge as relationship tools delivering working capital, convenience, and control, contributing substantially to a company's liquidity management prowess.

Opening a Current Account

Go to Kotak811's official website and complete the online current account opening by entering your Aadhaar-linked mobile number, email ID, and pin code of your business location.
After entering these details, click “Open Account” to initiate opening a Current Account.
After that, a bank representative will verify your identity through KYC.
After successful KYC verification, internal due diligence, and background checks, You will receive a Kotak811 Current Account.

List of Documents Required.

Below, we have mentioned the current account documents required for opening a current account for your business:

In the case of Sole Proprietorship

Any two of the following documents as proof of business or business dealings in the proprietary firm's name:

Certificate/licence issued by the municipal authorities under the Shop and Establishment Act
CST/VAT/ GST certificate
Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT/ Licence/certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute
Complete Income Tax Return (not just the acknowledgement) in the name of the sole proprietor where the firm's income is reflected, duly authenticated/acknowledged by the Income Tax authorities
TAN Allotment Letter issued by NSDL in the name of the firm
Certificate/ License of Registration under any specific Statute/Act of the government

Identity and Address of the Sole Proprietor:

Passport
Aadhaar Card
Voter ID Card
PAN Card
Driving Licence
Recent Utility Bills (electricity, water, gas. etc.)
Bank Statement or Passbook with address
Rental Agreement (if the business is operating from a rented property)

Note: You can open an individual current account by submitting an Aadhaar and PAN card.

Note: You must also submit a self-declaration in the Bank’s prescribed format.

In the case of Partnership Firm

PAN in the name of the firm
Partnership Deeds

Registration Certificate or a government-issued document attesting to the firm's name, address, and business.

Certificate/licence issued by the municipal authorities under the Shop and Establishment Act
CST/VAT/ GST certificate
Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT/ Licence/certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute
Complete the Income Tax Return (not just the acknowledgment) in the sole proprietor's name where the firm's income is reflected, duly authenticated/acknowledged by the Income Tax authorities.
NSDL issued a TAN Allotment Letter in the name of the firm.
Certificate/ License of Registration under any specific Statute/Act of the government.
Utility bills such as electricity, water, and landline telephone bills.

Proof of Identity & Address of Partners

Passport

Driving Licence

Voter ID card

Aadhaar card

PAN card

Letter issued by the National Population Register

In the case of a Limited Liability Partnership

PAN in the name of the firm
LLP agreement
Certificate of Incorporation issued by the Registrar of Cos
Resolution for Account Opening
Beneficial owner information & KYC documents

Identity & Address Proofs of Partners/Authorised Signatories:

Passport
Driving Licence
Voter ID card
Aadhaar card
PAN card
Letter issued by the National Population Register

In the case of a Hindu Undivided Family/ Joint Hindu Family (HUF)

PAN Card in the name of HUF
HUF declaration (duly signed by all the co-partners and naming the Karta, who would be authorised to operate the account.)
Proof of ID, Address & Signature, Proof of Karta
Passport
Driving Licence
Voter ID card
Aadhaar card
PAN card
Letter issued by the National Population Register

In the case of Public or Private Limited Companies

PAN Card in the name of the company
Certificate of Incorporation
Certificate of Commencement of Business (only for limited companies incorporated under the Companies Act 1956)
Updated Memorandum & Articles of Association
Board Resolution for Current on Letterhead
List of Shareholding Patterns on letterhead
Proof of Principal Place of Business / Registered Office / Mailing Address
The present list of names of Directors & Identity & Address Proofs of Authorised Signatory
Passport
Driving Licence
Voter ID card
Aadhaar card
PAN card
Letter issued by the National Population Register
Beneficial owner information & KYC documents

Advantages of having a Current Account

Current accounts allow for the systematic handling of large receipts and payments.
Unlimited withdrawals are allowed, subject to cash transaction fees.
There are no restrictions on deposits made at the home branch. Cash can also be deposited at other branches for a small fee.
Cheques, pay orders, or demand drafts can be issued for direct payments to creditors.
Facilitates industrial progress. Without it, businessmen would face difficulties in running a business.
Provides internet and mobile banking to enable important business transactions promptly and easily.
There are zero current account fees and charges.
You can earn current account interest rates up to 7%* Per annum.

Wrap Up

A current account is an important financial product for all individuals and businesses to manage their routine funds and obligations seamlessly. With low-cost transactions, round-the-clock access, global compatibility of debit cards, and other customization as per user needs - current accounts have become a fundamental tool for day-to-day money matters.

Opening an account with a trusted bank provides complete convenience and control over funds from anywhere, anytime. Based on the profile and spending habits, customers can evaluate and choose the suitable current account type to fulfil their regular financial requirements comfortably and securely.

Frequently Asked Questions (FAQs)

Q.1: What is a Current Account?

A current account is a type of bank account that enables the storage and transfer of money and frequent and instant access to cash. In addition to direct debits and standing orders for automatic payments, many current accounts come with debit cards that can be used for purchases.

Q.2: What are the eligibility criteria for opening a current account?

If you fit into the following categories, you can use a Regular Current account: Individual Resident, Hindu Undivided Family, Sole Proprietorship Firms.

Q.3: How much does a Current Account cost?

A current account's cost varies based on the bank and account type. While many banks like Kotak811 provide current accounts without charge, some could charge for specific services. When selecting a current account, evaluating the prices of several options is essential.