What is a Current Account?
Current Account is primarily meant for businessmen, firms, companies, and Public enterprises etc. that have numerous daily banking transactions. Current Accounts are meant neither for the purpose of earning interest nor for the purpose of savings but only for convenience of the business, hence are they non-interest bearing accounts.
Banks will not pay any interest on a current account. On the other hand, banks charge service charges, on such accounts. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day.
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 favor by third parties. Banks generally insist on a higher minimum balance to be maintained in current account.
In terms of RBI directive banks are not allowed to pay any interest on the balances maintained in Current accounts. However, legal heirs of a deceased person are paid interest at the rates applicable to Savings bank deposit from the date of death of the account holder till the date of settlement.