Opening and using a business current account

Understand why businesses use current accounts, how operations differ from savings accounts and what banks commonly verify.

A current account is designed for frequent business receipts and payments. Common uses include receiving customer collections, paying suppliers and salaries, depositing or issuing cheques, using digital collections, reconciling taxes and expenses, and keeping business money separate from personal money. Banks set transaction facilities, service charges, minimum-balance rules and cash-handling limits under their own policies. A current account normally pays no savings-style interest. Borrowers with cash-credit or overdraft facilities should disclose existing banking arrangements because RBI directions govern how banks open and operate current accounts for such borrowers.

Eligibility

The account name and constitution should match the legal or recognised business structure. The bank performs KYC of the entity, authorised operators and beneficial owners as applicable.

Potential benefits

Cleaner bookkeeping and audit trail; business-name collections and payments; payment and collection services; easier reconciliation; support for tax, lender and financial-statement records.

How to apply

Choose a bank and compare charges and facilities. Prepare PAN and constitution records, address and business-activity proof, photographs/KYC of relevant persons, beneficial-owner information and an authorisation or board resolution where applicable. Submit the bank application, complete verification and fund the account as required. Requirements vary by bank and risk assessment.

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