Being a business owner requires you to carry out multiple transactions throughout the month. Also, there might be days when you might need more money than what you have at the moment. To fulfill all these requirements, banks offer current account facilities to business owners. We shall look at some of the key features and advantages of current accounts before proceeding to the types of current accounts.
Key features
- They do not offer any interest rates on your deposited money. The primary goal is to facilitate easy cash flow for the business owner.
- They offer overdraft facilities. In this facility, a person can carry a transaction of an amount more than what they have in their account at that time.
- Money borrowed from the bank such as an overdraft on a short-term basis is chargeable. Interest is applicable on the overdraft amount.
- The minimum balance to maintain is much higher than what’s in the case of a savings account.
- There is practically no limitation on the number of transactions that can be carried out in a day.
- You can only open one current account for a particular business.
- Direct debits. This is one of the important features. With this facility, a person can set up automatic payments to pay regular bills such as utility, rent, etc.
- With saving accounts, there is a withdrawal limit from ATMs and bank branches. But in the case of current, this limit is much higher giving the business owner flexibility in managing their funds.
Advantages
- Usually, a cash deposit is done at the home branch. But current account holders get the option to deposit their money at any other bank branch. Although extra charges will be implied on the cash deposited.
- It gives banks the ability to bank to collect money on behalf of their clients and credits the same in their customers’ current accounts.
- Through interbank connections, the creditors of the account holder can learn about the account holder’s creditworthiness.
- Current accounts are essential for the industrial growth of a country. Facilities like these help businessmen conduct their business smoothly.
Types of current account
To fulfill the demands of diverse company kinds, including SMEs, startups, mid-market, and major firms, banks in India provide a variety of current account types. Here are a few types which are being offered by banks.
Basic
Customers with modest incomes, such as retirees, students, and others, will benefit most from the product. It makes for easier financial management for them. However, there are certain restrictions on how much cash may be removed each day.
Regural
The regular one is one of the most important type. It is a particular one that is not interest-bearing. There must always be a minimum average balance in this account. Additionally, it provides conventional services like NetBanking, SMSBanking, a checkbook facility with a large number of check leaves, a debit card, an overdraft facility up to a certain amount at the bank manager’s discretion, as well as free NEFT and RTGS transactional services.
Premium
Established businesses with high transaction volumes and large turnover. Additional perks provided by banks include privileged interest rates, devoted relationship managers, and other value-added services.
Foreign Currency
If you have a business that operates at an international level with transactions occurring in multiple currencies this account facilitates you to carry out your transaction in foreign currency.
Cash Management
These kinds of accounts are appropriate for large and mid-sized businesses that need sophisticated cash management services. Banks provide services such as automated cash management systems, virtual accounts, and cash pooling.
Trade
Many businesses are involved in international trade. Having a trade current account offers you features such as import-export financing, letter of credit, and other trade-related services.