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A Current Account is a bank account designed for businessmen. Read this comprehensive guide to know the documents required and procedure to open such an account.

What is a Bank Current Account?

Last Update Date : November 16, 2018

Current Account is a type of financial deposit account. Current Account sometimes also called as the open account is one in which money can be deposited and withdrawn at any time during working hours without giving any notice to the bank. The current account was introduced especially to suit the needs of businessmen.

current account

Features of a Current Account

  • Current Account helps a business to reach its goals by frequent withdrawals to suit the business needs
  • Since this account renders continuous services, so it is known as the current account
  • Bank does not pay any interest on the deposits in this account because it has to be ready to meet its commitments towards the account holders
  • Overdraft facility is the main feature of this account. The account holder can arrange with the bank to withdraw more than his deposits in the account
  • Current Account can be opened in any type of bank- Commercial & Co-operative bank
  • It is one of the convenient products for frequent banking transactions & is commonly used by professionals, entrepreneurs, small-scale & medium scale industries & business
  • A Current Account can be used to keep liquid funds to meet the requirements of the business – Payments & Withdrawals
  • It is a demand deposit generally suited for day to day transactions
  • The current account can be opened by individuals, sole proprietors, partnership firms, Companies, LLP etc.
  • It helps in providing a platform for business/ professional transactions
  • It requires a minimum balance. Non-maintenance of minimum required charges can attract a penalty
  • One can operate a current account any number of times in a day
  • There is no interest or very little interest due to its highly liquid nature
  • One can open Current Account only after proper KYC guidelines are followed
  • Current Account can provide a lot of benefits and advantages depending on the type of scheme and bank
  • Special benefits, seasonal benefits, import-export benefits are some of the latest additions to current account advantages
  • Standing instructions are accepted in Current Accounts

Documents Required for Opening a Current Account

Depending on the type of applicant, the kind of documents required varies.

Individual

  • One Identity proof: PAN Card/ Passport/ Voter Identity Card/ Driving License/ Aadhaar Card
  • One Address proof: PAN Card, Passport, Voter Identity Card, Driving License, Aadhaar Card
  • Recent passport size colour photograph
  • PAN Card
  • Account opening cheque from existing savings/ individual Current Account

Sole Proprietorship Firm & HUF

  • Latest passport-size colour photograph of the Karta/ authorised signatories of the account
  • Identity and address proof of the Karta/ authorised signatories of the account
  • Current landline/ mobile number and e-mail ID
  • Permanent Account Number (PAN). The PAN should be in the name of the HUF.

Partnership Firm

  • Latest passport-size colour photographs of authorised signatories of the account
  • Identity and address proof of authorised signatories of the account
  • List of beneficial owners holding more than 15% in the firm (on company letterhead)
  • Communication address proof of the entity
  • Permanent Account Number (PAN) of the entity
  • Partnership deed

Private or Public Limited Company

  • Certificate of incorporation
  • Memorandum of Association (MoA) and Articles of Association (AoA)
  • Board Resolution (BR)
  • Updated list of directors
  • Communication address proof of the entity
  • Current landline/ mobile number and e-mail ID of the entity
  • Permanent Account Number (PAN) of the entity
  • Latest passport-size colour photograph of each of the authorised signatories
  • A copy of one valid photo identification and address proof of each of the authorised signatories (Shareholding pattern/ list of beneficial owners holding more than 25% in the company either directly or indirectly (on letterhead)
  • Permanent Account Number (PAN)/ identity proof of such beneficial owners as identified above
  • Address proof of such beneficial owners as identified above
  • Identity and address proof of the Senior Managing Official in case the ultimate natural person is not identified as the beneficial owner
  • Identity and address proof of Senior Managing Officials in case the ultimate natural person is not identified as the beneficial owner

Trust, Society, Association & Club

  • Constitution document of the entity i.e.
    • The Trust Deed in case of public/ private trust or Bye-laws in the case of society/ association/ club
    • Memorandum of Association or Article of Association in the case of sec-25 companies
    • Rules of acts or Gazette notifications in the case of Govt. Quasi –Govt. or Semi –Govt., entities or entities established under Act under which the entity is established
  • The list of directors /Members of the Managing committee/ the Managing Council
  • A copy of the proof of identity of the entity viz.
    • Registration Certificate issued by Registrar in the case of societies /by charity commissioner in case of trust or societies engaged in charitable work or certificate of Incorporation issued by Registrar of Companies in case of companies
    • Recognition certificate in the case of educational institutions
  • PAN card or proof of exemption from income tax (if applicable)
  • Proof of communication address of the entity
  • Latest colour passport size photograph of each of the existing authorised signatories
  • A copy of one valid photo identification and address proof document of each of the existing authorised signatories
  • List of beneficial owners holding more than 15% in the Trust (Directly/ Indirectly on letterhead)
  • Permanent Account Number (PAN)/ Identity proof of such beneficial owners as identified above
  • Address proof of beneficial owners as identified above

Limited Liability Partnership (LLP)

  • Certificate of Registration issued by Registrar of LLP
  • Communication address proof of the entity
  • Current landline/ mobile number and e-mail ID of the entity
  • Permanent Account Number (PAN) of the entity
  • Latest passport-size colour photograph of each of the authorised signatories
  • A copy of one valid photo identification and address proof of each of the authorised signatories
  • In case Power of Attorney (POA) has been granted for account operations, photograph, and identity and address proof of the POA holder should also be submitted
  • Shareholding pattern/ list of beneficial owners holding more than 25% in the company either directly or indirectly (on letterhead)
  • PAN/ identity proof of such beneficial owners as identified above
  • Address proof of beneficial owners as identified above
  • LLP agreement
  • Updated list of designated partners

General Process to open Current Account

Here is the step-by-step procedure to open a Current Account in an Indian bank:

  • Step 1: Choose a bank of your choice and walk-in to the bank
  • Step 2: Fill in the prescribed form for opening a current account
  • Step 3: Enclose all your self-attested KYC documents and all the documents required for the firm duly stamped by firm’s stamp
  • Step 4: Signature of Authorised Signatory on Specimen Signature Card in presence of a Bank official
  • Step 5: Also fill in the Introducer’s Current Account number
  • Step 6: Hand over your form and specimen card to the bank official
  • Step 7: Original KYC documents will be verified by the bank official
  • Step 8: Once your account opens, collect the account number and deposit the initial amount
  • Step 9: Get your internet banking facility activated and apply for cheque book

Now your account is ready for operation.

Advantages of Current Account

  • It gives a distinct advantage to the business
  • One can easily deposit and withdraw money depending on the business requirement
  • Overdraft facility is available
  • It gives access to privileges like free bank account statements, mobile banking, internet banking, free ATM debit card, free self-transfer facility within the bank, attractive NEFT & RTGS facility, free cheque book facility, online Income Tax return filing etc.
  • There are also discount offers on foreign Exchange transactions
  • There are some banks which offer the facility of Zero Balance Current Account as well
  • It helps in the multi-location funds transfer, free account transfer to any branch, free nomination facility, multicity cheque facility, electronic fund transfers, and free personalized cheque book.
  • Some special privileges like waiving off processing charges on retail loans, facility of relationship manager, gold/ platinum international corporate credit card/debit card, cash management facility etc. is available
  • Many banks offer rewards in for operating current account, the points from these rewards can be redeemed and various facilities like free renewal, mobile app activation, eStatement etc. can be availed

Disadvantages of Current Account

  • The Minimum monthly balance has to be maintained, else penalty can be attracted
  • The rate of interest earned is nil or very low
  • There can be various charges/ fees for various benefits and extra advantage
  • Most of the facilities along in current account are charged with a fee

People also ask

Q. Can an Individual open a Current Account?

A. Yes, an Individual can open a current account. The Minimum Monthly Balance Requirement will differ from bank to bank. The documents required are Identity proof, Address proof, recent colour photograph.

Q. Is interest payable on Current Account?

A. No, generally no interest is paid on Current Account but some banks can pay according to the scheme and high minimum balance in the account.

Q. Can club current account be opened?

A. Yes, club account can be opened under the category of current account.

Q. Is there any limitation on the number of payments and withdrawals on a particular day?

A. Generally, there is no restriction on the number of times the deposit and withdrawals, but, there can be charges above a particular amount of deposit & withdrawals.

Q. Can I avail internet banking facility for a current account?

A. Yes, one will automatically get corporate internet banking facility on opening a current account.

Q. Is nomination facility available for current account?

A. Yes, nomination facility is available for current account as per eligibility and rules.

Q. Is demand draft facility available for current account?

A. Yes, DD facility is available – it is free or charged depending on the type of current.

Q. Does non-maintenance of minimum balance attract a penalty?

A. Yes, failing to maintain minimum balance as per requirement of the account attracts penalty.

Q. Are charges levied for maintaining the account?

A. Yes, bank charges amount under the head of folio charges for maintaining the account.

Q. Is standing instructions facility applicable to current account?

A. Yes, banks do give standing instructions facility along with the current account. There can be charges on some of the standing instruction facilities.

How can H&R Block help you?

Saving taxes and filing income tax return accurately becomes very easy when you have professional help. This is where we come into the picture. You can either use our intuitive tax filing platform to easily file your tax return or let our tax experts file it for you. We have a team of in-house tax experts who can file your tax returns accurately while giving you maximum tax benefits.

You should see the pros and cons, one should see, even if you are paying charges for most of its features and benefits. It should give you returns in terms of growth and easy availability of funds. We hope that this guide will help you making informed decision for opening and operating a Current Account.

Still Have Questions?