Pay attention to these things in your Current Account

07 AUGUST, 2023

Suppose X at 27 years of age started an eatery business and wants to open a Current Account with a bank to manage his business transactions seamlessly. So far, he used the savings bank account for all his banking transactions and now is unsure of what features he should look for when opening a Current Account. Let us assist X by mentioning a few crucial parameters he must pay attention to when zeroing on a Current Account.

• Transaction charges: A Current Account permits unlimited transactions. However, banks levy a charge when transactions exceed a preset limit. Thus, note that lower the transaction fee, the better deal it is for X.
• Minimum balance: Many Current Accounts require you to maintain an Average Quarterly Balance. Failure to maintain this balance may result in either account deactivation or accruing of penalty. Note that for Current Account, Average Quarterly Balance requirement generally is higher than savings bank account. Balance requirement is higher in Current Account owing to the provision of higher benefits in the form of issuance of free cheque, allowance to make unlimited transactions and withdrawals, free RTGS and NEFT facility, SMS, and email alerts etc. Thus, X should ensure to check the minimum balance requirement before zeroing on any account. He must choose the account offering maximum benefits at zero or minimal balance requirement.
• Premium services: Few banks provide services such as deposit and pick up of cash, dedicated relationship manager, faster outstation cheque collection, payment gateway solutions for instant receipt payments from customers etc. All these services may come at a cost. X must figure out whether he requires these services and the charges attached.
• Overdraft limit: Many of the banks provide you with a cash credit or overdraft facility after being convinced with your creditworthiness. In case X witnesses a cash crunch in his business, an overdraft service can assist him tide over it. Thus, he must opt for the bank that assures to provide the highest overdraft limit at the lowest interest rate.

Additional Read: Here's why businesses should opt for the Kotak ActivMoney Current Account

Remember availing a higher limit as overdraft is an important option for maintaining the stability of your business in the occasion of insufficient liquidity or any delay in receiving the awaited payment. Overdraft is an extended limit that bank offers, which is over your Current Account balance. Through this option, you simply can settle all your upcoming or pending payments in a hassle-free way. This further helps to preserve your company’s reputation. As interest on overdraft is just levied on the amount used, opting for a higher overdraft limit will not incur any expense.

• Core services: X must ensure that the selected bank is thoroughly reliable when it is about core services such as mobile banking, internet banking, IT services, ERP services, cash management services, multi-location fund transfers and cash deposits and debit card access.

Ensuring the promptness and quality of the bank services before selecting the Current Account will help in conducting swift transactions and maintaining the company’s reputation.

Once X has selected the bank, all he must do is submit all the documents for opening Current Account along with the filled up form.