Current account is an account with minimum amount of boundaries. Most individuals do not need this account, one need this account only if he makes a number of deposits and withdrawals in a single day and many of the deposits are drawn on outstation banks. Banks accept deposits in current account and allow unlimited withdrawals subject to a minimum balance. This minimum balance differs from Bank to Bank. Banks will not pay any interest on a current account. On the other hand, banks charge service charges, on such accounts. Opening of a current account is meant for a business enterprise or high worth individuals who deal with a lot of third party cheques, drafts etc. or who may at times need to borrow money from the Bank against some security.
Current accounts are mainly used by businessmen and are not generally used for the purpose of investment. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day. Most of the current account are firm / company accounts. Cheque book facility is provided in this type of accounts and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties.
According to Reserve Bank, Current account is “a form of demand deposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and shall also be deemed to include other deposit accounts that are neither savings deposit nor term deposit.”
See Also: What is Current Account?
Current accounts are opened by those who have commercial interests and have the need to issue many cheques. These include:
The RBI has asked banks to incorporate a certificate in account opening forms confirming the identity, occupation and address of the prospective customer signed by the introducer.
Features of Current Bank Account
Advantage of Current Bank Account
As the name denotes, this account is perfect for parking your temporary savings. These accounts are one of the most popular deposits for individual accounts. Savings accounts provide cheque facility and a lot of flexibility for deposits and withdrawal of funds from the account. Most of the banks have rules for the maximum number of withdrawals in a period and the maximum amount of withdrawal, but no bank enforces these. However, banks have every right to enforce such boundaries if it is felt that the account is being misused as a current account. At present the interest on these accounts is regulated by Reserve Bank of India. Presently Indian banks are offering 3.50% p.a. interest rate on such deposits
This account gives the customer a nominal rate of interest and he can withdraw money as and when the need arises. The position of account is depicted in a small book known as 'Pass Book'. Such accounts should be treated as a temporary parking area because the rate of interest is much less than Fixed Deposits. As soon as one’s savings accumulate to an amount which he can spare for a certain period of time, shift this money to Fixed Deposit. The returns on the money kept in Savings Bank account will be less but the freedom to withdraw is the highest.
Tips to remember while going for a Savings account
See Also: Functions Of Commercial Banks
|Feature/Service||Savings Account||Current Account|
|Business Banking||Not Applicable||Yes|
|Interest Rate||Applicable||Mostly No|
|Deposit Interval||Not Applicable||As per bank|
|Daily Withdrawal Limits||Applicable||Not Applicable, Mostly|
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