Current accounts are cheque operated accounts maintained for mainly business purposes. Unlike savings bank account no limits are fixed by banks on the number of transactions permitted in the Account. Banks generally insist on a higher minimum balance to be maintained in current account. Considering the large number of transactions in the account and volatile nature of balances maintained overnight banks generally levy certain service charges for operating a Current account.
In terms of RBI directive banks are not allowed to pay any interest on the balances maintained in Current accounts. However, legal heirs of a deceased person are paid interest at the rates applicable to Savings bank deposit from the date of death of the account holder till the date of settlement.
Features and Advantage of Current Bank Account
The main features of current account are as follows:-
- Current bank account is opened for business purpose and objective of current bank account is to enable the businessmen to conduct their business transactions smoothly
- Generally ,Banks do not pay interest on this bank account but Nowadays, some banks do pay interest on current accounts
- It needs a higher minimum balance to be maintained as compared to the savings account and penalty is charged if minimum balance is not maintained in the current account.
- Banker requires know your Customers (KYC) norms to be completed before opening a current account.
- There is no restriction on the number and amount of deposits and withdrawals.
- There is also no restriction on the number and amount of withdrawals made, as long as the current account holder has funds in his bank account.
- It enables a bank to collect money on behalf of its customers and credits the same in their customers’ current accounts.
- It also provides other advantages such as: deposit and withdrawal of money at any location, Multi-location funds transfer, Electronic funds transfer , mobile banking etc .
Eligibility to Open a Current Account
One could eligible to operate a Regular Current account if he/she falls under any of the following categories:
- Resident Individual
- Hindu Undivided Family
- Sole Proprietorship
- Limited company
- Association/Club/ Society
- Foreign Institutional Investor
- Foreign national residing in India
- Limited Liability Partnership
How to Open a Current Account
- Application to open an account must be made in Bank’s prescribed account opening form. All signatories are required to come in person to the bank to sign the account opening form. Required credentials depending upon the type of constitution of the prospective accountholder are to be submitted to the bank.
- Each applicant will be required to sign a declaration to the effect that he has read and accepted Current Account Rules. A copy of the rules is displayed on the Notice Board.
- A recent passport size photograph of every accountholder, proprietor / partners / Directors of the company / office-bearers / trustees and other officials authorized to operate upon the account, is required to be given to the bank.
Closing of an Account
- The accountholder must give in writing his/her intention to close the account. In case of partnership firm and joint account, the letter of request should be signed by all the partners and all the accountholders, respectively. In case of limited companies, a board resolution authorizing closure of the account is required.
- The unused cheque leaves, Debit Cards, if any, in the possession of the depositor should be returned to the Bank.
- Latest statement of account should also be presented.