Savings accounts mainly aim at meeting the personal needs of individuals. Similarly, current accounts [CAs] are meant to meet the business needs of customers. As prohibited by RBI, no interest is paid on balances in CAs. Since there is no interest involved in CAs, there is no restriction on the number of transactions or in the type of customers who are eligible to open such accounts. Owing to the high transaction costs involved in CAs, the minimum balance that needs to be maintained in CAs is much higher as compared to Savings bank account.
Current Account is mainly meant for businessmen, companies, firms, public enterprises, etc. that have many daily banking transactions. Current Accounts are cheque operated accounts that are meant neither for the purpose of earning interest and nor for the purpose of savings. These accounts are meant only for convenience of business and hence they are non-interest bearing accounts
Depending upon the nature and number of transactions, banks associate the minimum balance requirement with the level of service charges. For instance, an account with a large number of transactions will attract a higher minimum balance stipulation in order to defray a higher transaction cost involved.
Banks also provide certain value added services to customers, like facility of withdrawals from current accounts from anywhere, if the branches are networked. This facility enables a current account holder to access his funds from anywhere as per his business needs. At times, certain limitations may be imposed on the amount and frequency of transactions through anywhere banking.
Normally, banks charge the customers for any for any service rendered through a correspondent or partner bank locations or delivery channels. In such kind of services, ceilings are imposed on payment and collections. Extra charges are applied in case of transactions in excess of the ceiling. Similarly, certain banks offer to issue DDs and POs free of charge up to a certain number per month and chargeable above the prescribed limit.
Services offered for Current Accounts:
Some or all of the following services are offered for CAs:
- Payable at par facility
- Anywhere banking facility within the specified limits
- Cheque collection
- DD/PO issue from base branch or correspondent locations with ceiling as to amount/ number of DDs/POs free of charge for a period
- Phone and internet banking facility for viewing the account status
- Cheque return, chargeable on per instrument basis
- Cash transactions may contain restrictions as to amount that can be deposited in a month. All additional deposits are charged.
- Limits may be imposed for withdrawal of cash at base branch. Charges may vary if the non-base branch is within the same city or outside
- Practically all other services which are not originally agreed or exceed the given limits are chargeable. From the foregoing analysis, it is clear that banks design the product for a particular class of clientele based on the specific requirements and the cost of rendering such a service. Banks also decide on the rate chargeable for any service, based on the minimum balance requirement for a particular account, the number and nature of transactions.
Current Account can be opened by:
- An individual who has attained majority.
- Two or more persons in their joint names.
- Sole proprietorship concerns.
- Partnership concerns.
- Hindu Undivided Family (HUF).
- Limited Companies.
- Clubs, Societies.
- Trusts, Executors and Administrators.
- Others - Government and semi Government. bodies, local authorities etc.
Documents Required for Opening Current Account
- 2 passport size photographs
- Proof of residence i.e. Passport/driving license/ Telephone / Electricity Bill/ voters identity card/ Ration card
- Introduction of person from an existing account holder.
- PAN number or Declaration in form no.60 or 61 according to the Income Tax Act 1961