Current Account

Created by- Hema Rawat

Introduction It is a deposit account that can be taken in the bank by filling a bank accounts application. It is used for the convenience of withdrawing or depositing funds. Banks in India generally offer these bank accounts for business ventures and operations.

The level of competition amongst businesses has skyrocketed over the last decade and today, it is at a level which only few thought was possible. To grow a business, the entrepreneur has to regularly update all their business needs and goals with the help of money. A current account gives you better options to send and receive funds instantly to almost any part of the country. The current account is also known as demand deposit.

What are the uses of a current account?

Bank accounts make it possible for the applicant to deposit and withdraw funds at any time for whatever reason the bank account holder may have. There are no interest rates charged for these types of accounts by banks in India and you can fill the bank accounts application from any bank and get instant access to your account.

The applicant can only choose certain types of options to deposit the money. You can directly go to the bank and deposit the funds If you have a current account, you can send the cheque by post to the bank to

deposit money to your bank account You can use electronic transfer Use the debit card to buy any products and services online or from any

retail/shopping stores that have the option to check debit card and process payments.

FeaturesThere are many features and benefits that an applicant can avail by applying for a current account. Some of these are given below:

Banks in India charge no fees for transfers of funds from one account to another You can pay and collect the money through RTGS (Real Time Gross Settlement) and

NEFT (National Electronic Funds Transfer System) A certain limit on the demand draft and pay orders per month are applicable There are no special charges for clearing the cheques in any part of the country You can withdraw or deposit at any branch of the banks in India The bank accounts are safe, secure and convenient You can enjoy all the benefits such as phone banking and net banking and for any

queries, you can contact the customer support representatives of the bank

Who Can Open? This account is opened for business or commercial use. Normally current account is opened by those who have commercial interest and

have need to issue many cheques.These include: Individuals Sole proprietorships Hindu undivided family Partnerships Trusts associations Societies and clubs Limited companies

Documents RequiredSole Proprietorship Hindu Undivided

Family Partnership Company Trust /Association

Id proof & address proof of the proprietor Utility bill such as Telephone/Electricity bill

in the name of the proprietary concern

Id proof & address proof of the Karta , id of proof of the

coparcenersDeceleration from the Karta

PAN card of the firm/Id or address proof & photos of

the partners

Id proof of all directors/authorised

signature PAN card of directors passport, voter id

card

Id proof & address proof of the founder

Registration certificate, Certificate license issued by

municipal authorities Deed of deceleration of HUF Id proof & address proof of the person holding POA

Certification of incorporation, Commencement of business,

Memorandum & Article of association

Trust deed, registration certificate

List of trustees with their signature

Sales tax/central sales tax/value added tax Photos of Karta

Partnership deed, partnership registration

certificate

Company pan card or Application

acknowledgement (less than 90 days)

Power of attorney

Income tax return in the name of proprietor

Certified board resolution, power of attorney granted to

its manager officers or employee to transact on its

behalf

Telephone Bill

Facilities Overdraft – An overdraft is a facility granted by the bank to a current account

holder. Overdraft is an arrangement between a bank and its customer by which customer is allowed to withdraw over and above his credit balance in the current account. There is an agreed limit of overdraft. This is a temporary facility usually provided to the current account holder. The burrower is permitted to withdraw and repay any number of time up to the sanctioned limit. Interest is charged only on the amount overdrawn by the burrower. It is an short term facility.

Cash credit – Under this facility a separate cash credit account is opened and the customer can burrow fund from this account upto a certain limit. The limit is decided depending on the collateral security that the customer offers to the bank for providing this facility. The bank charge interest on the amount withdrawn.

Nomination facility - A depositor is permitted to officially authorise someone, who would receive the money of his account when the depositor passes away. This is called nomination process. Nomination facility is available to all deposit account opened by individuals. Nominee is a also available to the sole proprietary concern account.

Responsibilities of the current account holder

There are certain responsibilities that the applicant must have and follow in order to maintain proper transfers to and from the account:

Make sure to keep all your bank accounts and PIN number from the reach of anyone else

Banks in India issue account statements every month by sending them to your email or residence address. Collect all the statements and keep them up to date.

Don’t ever sign in the cheque book. If you have any cheques that are not valid destroy them immediately

Banks in India require you to inform them of any change in the residence address, phone number, loss of cheque book or cheque

In case of theft or loss of Debit card or credit card, make sure to inform the bank to block your account

Advantage of current account Current account is mainly opened for businessmen such as proprietors, partnership

firms, public and private companies, trust, association of persons, etc. that has a large number of daily banking transactions, i.e. receipts and/or payments.

It enables businessmen to carry out their business transactions properly and promptly.

The businessmen can withdraw from their current accounts without any limit. It helps businessmen to make a direct payment to their creditors by issuing

cheques, demand-drafts or pay-orders, etc. It enables a bank to collect money on behalf of its customers and credits the same

in their customers' current accounts. It enables the current account holder to obtain overdraft (short-term borrowing)

facility. It facilitates the industrial progress of the country. Without its help, businessmen

would face difficulties in running their businesses. It has the facilities of Internet-banking and mobile-banking to carry out important

business transactions with ease and quickly.

Disadvantage of current accountThere are a couple different disadvantages of using a current account.

One of the disadvantages of a current account includes drawing a low interest rate. The initial paperwork when opening an account is lengthy and terms are difficult to

understand. Penalty is charged if minimum balance is not maintained as compared to the

savings account

Interest on current account

Banks do not pay interest on balances maintained in a current account The RBI prohibits the payment o f interest in the current account. In addition,

RBI also prohibits the payment of countervailing interest. Banks are permitted to pay interest on the current account of a regional rural

bank they have sponsored. Since May 1983 banks have been permitted to pay interest on the balances in

the current account standing in the name of deceased individual

Dormant Account and charges If there has been no customer initiated transactions in the account for 2

years, the account will be designated as the “DORMANT ACCOUNT” Many banks reduced this period to 6 months. These accounts are subject

to greater check, as they are susceptible to fraud. Bank often insist on a minimum average monthly/quarterly balance to be

maintained in the account. If the balance is not maintained a service charges is levied.

Client must be advised of any changes in the charges.

Comparison of BankColumns ICICI Bank Corporation Bank

Saraswat Cooperative

BankStandard Chartered

AMB/AQB ₹ 10,000 ₹ 5000 urban&metro ₹ 2500 for semi urban ₹ 5000 ₹ 1,00,000

NMMAB/NMQAB ₹ 300 ₹ 250 ₹ 600 ₹ 2000

RTGS Free 50% concession through net banking Free Free

INTERNET BANKING Free Free Free Free

SMS Banking Free ₹ 100 Free -

Demand Draft Free 50% concession through net banking Free Free

Replacement/ lost/ stolen debit card ₹ 200 ₹ 200 ₹ 99 Free

Comparison of BankColumns ICICI Bank Corporation Bank

Saraswat Cooperative

BankStandard Chartered

Cheque Leaves 25 100 leaves free per year 50 3

Duplicate statement 100 Per Instant 50 Per Instant Free 40

ATM transaction at other bank ATM outside India

(per transaction)₹ 108 - - ₹ 140

NEFT Online Payment Free Free Free Free

Closing an account To close an account all the account holders should write to the bank stating that

intent to close the account. All unused cheques should be cancelled and return to the bank.

The bank may also request the customer to close his account If the customer is no longer a desirable person and the account has not been

operated for a long term.If a customer cannot be traced, the balance placed in an unclaimed deposit account .It’s a statement or correspondence sent to the customer is returned the balance and should be transferred to the “Dormant Account” .

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