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Zero balance current account: everything you need to know

Businesses are involved in hundreds of transactions in their day-to-day operations. To ensure smooth transactions, banks offer different types of current accounts for businesses. unlike savings accounts, which are used to reserve funds and earn interest, current accounts are mainly used by businesses and individuals who make frequent transactions. You can also enjoy essential banking services such as online banking, cash withdrawals and cheques. The zero-balance account is one of the later types of current accounts.

What is a zero balance current account?

Zero Balance current account allows you to trade without having to maintain a Monthly Average Balance (MAB), which in some cases is quarterly. the MAB is the average daily balance of your account that you are required to maintain at the end of each month. Failure to do so may result in non-maintenance fees.

This account type is perfect for startups and small businesses for day-to-day transactions. It can increase the liquidity of your business and provide easy access to working capital through an overdraft line or bank loan.

Why is a zero balance requirement good for small businesses?

Small businesses can face difficult times with erratic capital flows and limited funds. This, coupled with the pressure of needing to maintain a minimum balance or pay for non-maintenance costs, certainly adds to the burden on the business. You can't even earn interest on the minimum balance in a current account. A zero balance account can therefore meet the banking needs of a business without adding additional stress. This is a financial inclusion initiative for small businesses and the government aims to make banking accessible to all businesses.

Current account Eligibility and Documentation Requirements

There are no specific eligibility criteria for opening a zero balance current account. However, different banks may have different criteria. Typically, you may be required to provide the following basic documents:

- PAN Card

- Proof of identity, correspondence and residence

- Proof of business - Certificate of Incorporation, Partnership Agreement or Association Charter

- colour photograph

Advantages of current account

Nowadays it is impossible to run a business without a bank account and CURRENT ACCOUNT is extremely suitable for any size or type of business. The following are the most significant advantages:

- Easy access to liquidity: Businesses can access funds whenever they need them, with no restrictions on withdrawals.

- Unlimited transactions: You can send and receive as many payments as you need.

- No minimum balance: You don't have to worry about funds being tied up in minimum balance requirements.

- Better money management: the bank records all your transactions and you can easily access this information to keep track of your business finances.

- Take advantage of online banking: Having a current account allows you to run your business smoothly by also having access to online banking services.

- Access to value-added services: Your current account record reflects the creditworthiness of your business. This can make you eligible for overdraft and loan facilities to help you solve problems when you need them.

Combine your current account with a powerful payment solution

While you enjoy the flexibility of a zero-balance current account and online banking, you can also offer your customers a choice of over 150 digital payment options. It only takes a few minutes to integrate PayU's payment solutions into your website or app and start getting payments into your current account. your customers will enjoy a smoother checkout experience, and you can track all payments and settlements through the simple PayU dashboard.

Click here to learn more about PayU's payment solutions.

Frequently Asked Questions

What is a zero balance current account?

A zero balance current account is a bank account suitable for individuals and businesses that carry out a large number of daily transactions. The special feature of a zero balance current account is that it does not require an average monthly balance. It is ideal for small businesses that are usually strapped for cash.

What are the different types of current accounts?

There are various types of current account such as standard, package or foreign currency. Zero balance current account is one of them and is very beneficial for small businesses as it has no minimum balance requirement among other advantages.

What are the advantages of a zero balance current account?

Zero balance accounts -

No withdrawal or trading restrictions

No minimum balance required

Allow account holders to access overdrafts and credit facilities

Provide other benefits such as cheque books, online banking, etc.

Can I open a current account online?

While this may vary from bank to bank, it is possible to open a current account online. However, the process and documentation requirements for opening a current account may vary.

What is the purpose of a zero balance account?

A Zero Balance Account (ZBA) is a business checking account that allows your account balance to be reduced to zero. It is usually associated with a master account that transfers funds to the ZBA when a transaction occurs.