What is a Current Account - Meaning, Definition, & Features in Bank?
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When it comes to managing your finances, banks offer various types of accounts. Among these, the most common ones are Current Accounts and Savings Accounts. While a Savings Account is the go-to choice for many, a Current Account might seem unfamiliar to some. You might have encountered the term "Current Account" while using an ATM, especially when prompted to select the account type for fund withdrawal. If you are doubtful of what is a Current Account and how it differs from the other ones, here is the answer.

What is a Current Account?

Current Accounts, or financial accounts, can be opened by various entities such as sole proprietorships, private/public limited companies, insurance firms, mutual funds, educational institutes, and stock and share brokers, among others. The Current Account is a specific type of deposit account designed for conducting a significantly higher volume of business transactions and daily withdrawals. 

As the Current Account definition suggests, the primary purpose of Current Accounts in banking is to let account holders perform multiple transactions daily. In addition to this, banks do not offer any interest rates on these accounts.

How Does a Current Account Work?

Business owners explore the Current Bank Account and open one to handle many regular financial transactions, including deposits and withdrawals. The account holders can access funds in a Current Account whenever needed without any restrictions. However, banks provide no interest rate to compensate for these accounts' extra liquidity.

Features and Benefits of Current Account

If you refer to what is a Current Account, it is a kind of deposit account held with the bank to manage and conduct big-ticket business transactions. So, in case you own a company, a Current Account is the correct account type to opt for. There are various Current Account benefits that make this account distinctly unique:

  • No daily limit for transactions and withdrawals.
  • Current Accounts are primarily designed for businesses, allowing them to conduct a large number of transactions daily.
  • Businesses can authorise multiple individuals to operate the account, enhancing operational flexibility.
  • Having a Current Account with a bank enhances a business's credibility, which is crucial for transactions with suppliers and clients.
  • Alerts via SMS and email.
  • Better forex rate and trade services.
  • Dedicated relationship manager.
  • Businesses can deposit and withdraw large sums of cash, effectively managing their cash flow.
  • Overdraft facility – to meet your business requirements.

Opening a Current Account

Now you might have understood what a Current Account is, you can follow these steps to open one:

  • Visit the official website of Kotak Mahindra Bank and select the ‘Business’ tab on the top.
  • Click on 'Open Online' to open a Current Account or 'Explore More' to know about the wide array of offerings.
  • If you select 'Open Online,' choose your business type from Individual or Sole Proprietorship.
  • Fill out an online form with all the details.
  • You will receive your Current Account details and number with a customer relationship number once the account is opened.

List of Documents Required*:

Identity Proof:*

  • Passport
  • Aadhaar Card
  • Voter ID Card
  • PAN Card
  • Driving License
 

Address Proof:*

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

Business Proof:*

  • GST Registration Certificate
  • Certificate of Incorporation (for companies)
  • Partnership Deed (for partnership firms)
  • Shop and Establishment Act Certificate
  • Professional Tax/Sales Tax/Service Tax registration
  • Trade License
  • Memorandum and Articles of Association (for companies)
  • Board Resolution (for companies)
  • Business PAN Card
  • Business Registration Certificate
 

Along with this, always ensure that you keep your documents updated before opening a Current Account. It will help you avoid any unnecessary hassle post or during the account opening process.

*These are only an indicative list; the actual documents required may differ on a case-to-case basis.

Read Also: Difference between Current Account and Savings Account

Conclusion

Understanding the Current Account definition is crucial to getting the most out of your financial transactions. It provides high liquidity in cash deposits and withdrawals, though at a price of no interest rate. Managing finances regularly helps sustain business operations and plan the finances efficiently. After understanding the benefits of a Current Account, open one at Kotak Mahindra Bank and avail of powerful banking solutions that empower you to grow your business.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.