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Do Current Accounts Have a Minimum Balance Requirement?
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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.
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A Current Account is one of the most important accounts you cannot ignore while starting a business. A Current Account allows you to make more transactions than a Savings Account. Besides this, other crucial Current Account benefits are the provision of an overdraft facility, free outstation cheque collection, unlimited demand drafts, free access to ATM cards, free cheque collection via speed clearing, free alerts via SMS and email on transactions, dedicated relationship manager, better forex rates, etc. Owing to such benefits, the Current Account minimum balance requirement is much higher than that of a Savings Account. Note that the Current Account minimum quarterly balance requirement may range between Rs. 10,000 and Rs. 15,00,000. As a Current Account has a higher minimum quarterly balance requirement than a savings account due to the additional services offered, let’s understand the services in detail. Also discussed are the important Current Account documents you must keep handy to open the account.
Overdraft Facility
The overdraft facility allows cash withdrawal over and above your Current Account's balance. This benefit helps you meet business expenses, pay the salaries of your staff on time, and meet other important business requirements.
Allows Unlimited Transactions
A Current Account sets a higher upper transaction limit, eliminating the need to worry about smooth cashflows. You can conduct unlimited transactions of any amount based on your business requirement. Thus, a Current Bank Account offers high money fluidity, which a Savings Bank Account cannot provide.
It Makes Operational Transactions Simple
Any delay in a transaction may result in hiccups in a business. With a Current Bank Account, all your business operations can run smoothly. A smooth transaction flow allows your business to maintain a good reputation and build trust with customers and vendors.
Offers High Credibility
Before providing your business with any work, other entities tend to ask for a creditworthiness letter. This is a letter issued by your bank with whom you hold a Current Account. Your bank may issue this letter to you only if you maintain a good banking relationship. You can maintain a good relationship if you use the Current Account for all your business transactions and ensure to repay your outstanding dues in full and on time.
Additional Read: Know About Deposit Limit and Charges Associated with Current Account
Documents Required To Open Current Account
Your PAN, address and identity proof. These documents include your passport, Aadhaar, voter ID, etc.
Bottom Line
In a nutshell, the Current Account comes with certain benefits that require a higher minimum balance. Therefore, the Current Account minimum balance requirement is higher than other types of accounts. The flexibility of a Current Account makes it a significant and irreplaceable bank account for the business. However, note that your Current Account balance does not earn any interest. Current Account interest rates are zero because the account is designed to conduct higher business transactions and not save funds like a regular Savings Bank Account.
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