Must-read for investing in India: a guide to types of current accounts in Indian banks www.deekpay.com

What is Bank of India Current Account?

An Indian bank current account is a type of bank account offered by banks or financial institutions within India that allows individuals, businesses and organisations to manage their day-to-day financial transactions. A current bank account facilitates easy deposit of funds and quick withdrawals, features that favour people with high cash flow and an urgent need for funds. Current accounts can be opened by individuals, sole proprietorships, partnerships, trusts, limited liability partnerships, private limited companies and limited liability companies.

A current account relates to liquid deposits and offers a wide range of customisation options to assist with financial transactions. Current accounts also allow payments to be made to creditors through cheque services provided by banks. Generally, current accounts do not offer interest and require a higher minimum balance compared to savings accounts. However, the greatest advantage of a current bank account is that the account holder can easily access overdraft facilities up to an agreed limit.

Current accounts play a key role in modern financial management because of their versatility and usefulness. The reasons why they are so important are as follows:

Transaction convenience: The current account supports seamless and fast transactions, including deposits, withdrawals, fund transfers and bill payments. This is especially convenient for everyday expenses. Overdraft facility: Many current accounts offer an overdraft facility that allows you to withdraw more money than is in your account, up to a predetermined limit. This can be a lifesaver in an emergency or during temporary cash flow difficulties. Cheque payments: Current accounts often come with a cheque book, making it easy for businesses to make payments to suppliers, employees and other stakeholders. Mobile Banking: You can also use your current account to access mobile banking services to do your banking anytime, anywhere. This eliminates the need to visit a bank branch every time you want to use banking services.

Types of Current Accounts in Indian Banks

Standard Current Account: The standard current account is the most common type of current account and requires the account holder to maintain a minimum average balance each month. This account has restrictions on any interest payments. However, financial institutions offer a wide range of features such as debit cards, cheque books, overdraft services, etc. Basic Current Accounts: these current accounts are mainly operated by individuals with lower incomes, such as retirees, college students, and so on. The main purpose of this type of current account is to manage finances better in a systematic manner. However, unlike other types of current accounts, this type of current account has restricted daily transactions. Premium Current Account: as the name suggests, this type of current account offers a lot of exclusive features and benefits to its customers. Hence, individuals or businesses use this current account for daily transactions. Package Current Account: Like the Premium Current Account, the Package Current Account offers more benefits and offers such as medical support or assistance and travel insurance. However, account holders are only required to pay a nominal monthly account maintenance fee to enjoy these benefits. Foreign Current Accounts : Foreign Current Accounts have account holders who are non-residents of India or other individuals using foreign currency. These current accounts are not part of the National Deposit Insurance Scheme (NDIS).

Note: The names of current account types may vary from bank to bank in India, but the functions are mainly in these five categories.

Functions of a current account in an Indian bank

Transaction Amount: One of the main functions provided by the current account is to accept transactions in excess of the permitted limit for savings accounts. Minimum Balance: The minimum balance to be maintained in a current account is higher than in a savings account. However, if someone fails to maintain this balance, he/she will be penalised or fined. Different account holders: In terms of operation, individuals, partnerships, private and public companies, trusts and associations can open and operate current accounts. Unlimited Transactions: Different types of current accounts can make unlimited transactions in a single day. Smooth Transactions: Small business owners or entrepreneurs mostly use current accounts to handle their daily transactions smoothly. However, a business can only register one current account in its name. Internet/Mobile Banking: Small business owners with any type of current account can easily use internet banking and mobile banking. Overdraft facility: Current account holders can use the overdraft facility. Available short-term funds: Current account holders can borrow short-term funds. However, they are required to pay interest on the short-term funds borrowed from the bank.

Benefits of Current Accounts in Indian Banks

Large Payments: Opening a current account allows business owners to systematically receive or pay large amounts of cash. Unlimited Withdrawals: Account holders can make unlimited withdrawals subject to a cash transaction fee. High accessibility: any type of current account can be accessed from any location other than the bank's headquarters. Cash deposits to the bank account from other locations are subject to a nominal fee. Easy transactions: with a current account, direct payments can be made in the form of payment orders, cheques and demand drafts. Extra benefits: A current account opened for business purposes unlocks a number of additional benefits. It includes depositing cash or withdrawing funds from any location, getting free inward remittances, making multi-location transfers and more. Easy account opening: To open a current account, applicants need to follow KYC guidelines and fill in other necessary details. Provides credit information: Current accounts enable creditors to know the creditworthiness of the account holder with the help of inter-bank connectivity.

Monthly Average Balance (MAB) requirements for basic current accounts at different banks

Bank Monthly Average Balance (MAB) Free Deposit Limit HDFC BankRs.10 times of 75,000 MAB ICICI BankRs.12 times of 25,000 MAB Axis BankRs.10,000 up to Rs.2 lakh Induslnd BankRs.10,000 up to Rs.2 lakh Canara BankRs.10 lakhs (quarterly) up to Rs.5 lakhs per dayYes BankRs.10 lakhs (quarterly) up to 10 times the highest bit of MAB Punjab National BankRs.10 lakhs (quarterly) up to Rs.2 lakhs per day

What are the different ways to deposit cash into a current account?

Users can deposit cash into a current account using any of the following methods:

Cash deposits at any bank branch Cheque Deposit Electronic Funds Transfer Overseas remittance

Different types of access provided by current accounts

Users can access the current account for daily cash transactions using any of the following methods:

Head Office: Customers can visit the Head Office for various banking needs such as cash withdrawals, deposits, financial assistance, etc. Even at bank branches, fees may be charged for withdrawals or deposits above a certain limit.

Cheque Services: This is one of the traditional ways of withdrawing cash from a current account. Although online banking is taking over most physical transactions, the cheque option is still preferred by many customers.

ATM: Customers can withdraw cash from any nearest ATM without travelling to a branch. ATMs allow you to withdraw cash after normal banking hours but with lower withdrawal limits.

Internet Banking: The internet banking feature enables account holders to carry out a variety of banking operations such as cash transfers, settle payments, check statements and balances, and much more. It is one of the most popular ways to access current accounts as you can even make transactions during non-banking hours. Instead of waiting in long queues and filling out forms, you can transfer money from your account at the click of a button. However, there are certain limits on online transfers, beyond which you will need a cheque in order to make such transactions.

Telephone Banking: Most leading banks offer telephone banking services that allow customers to perform a range of activities over the phone. You can use telephone banking features to view your transactions, make payments or check your balance.

Documents required to open a current account

Users are required to submit the following documents to the bank in order to open a current account:

PAN card proof of address Corporations or trusts must submit a certificate of incorporation and articles of incorporation Partnerships must submit a partnership agreement Proof of identity and residence of all partners Colour photograph of the applicant Cheque from existing savings account (for account opening) Company should provide mailing address

Note: Ensure that the KYC documents submitted are valid on the date of submission. Recommended Reading:What is PAN Card India

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