A current deposit account, commonly referred to as a current account, is a type of demand deposit account primarily designed to facilitate frequent and high-volume transactions typical of business establishments. These accounts cater to the needs of businesses and individuals engaged in regular financial operations.
Eligible Entities for Opening a Current Account
The following categories of entities are eligible to open current accounts with banks:
- Individuals / Sole Proprietorships
- Hindu Undivided Families (H.U.F)
- Partnership Firms / Limited Liability Partnerships (LLP)
- Private and Public Limited Companies
- Trusts
- Clubs, Societies (including Co-operatives), Associations, and Educational Institutions
- Government and Semi-Government Departments
- Hospitals, Nursing Homes, and Pathological Laboratories
- Administrators and Executors
- Liquidators
The documentation required to open a current account varies depending on the legal structure of the business entity—be it a sole proprietorship, partnership, company, trust, society, or government body. Each applicant must provide specific documents relevant to their category, and in all cases, banks are required to complete a thorough Know Your Customer (KYC) process for both the entity and its key stakeholders (proprietor, partners, or directors).
Additionally, certain establishments—such as hospitals, nursing homes, and laboratories—may be required to furnish a copy of the relevant government-issued license or certificate of registration in order to operate legally, in addition to the standard documentation needed for account opening.
Salient Features of a Current Deposit Account
1. Non-Interest-Bearing Account:
Current accounts do not earn interest on the funds maintained. For this reason, they are also known as non-interest-bearing accounts.
2. Chequebooks:
Banks typically issue chequebooks with current accounts, allowing account holders to make payments to suppliers, vendors, or employees. These cheques can also be used for bill payments, donations, and cash withdrawals. Chequebooks come in various formats tailored to specific transaction needs.
3. Higher Cash Deposit and Withdrawal Limits:
Banks often allow higher daily cash deposit limits for current accounts—commonly exceeding ₹1,00,000. Some banks offer complimentary cash deposit facilities up to ₹10 lakhs per month or a limit tied to the average monthly balance. Charges may apply for deposits beyond the prescribed free limit. Withdrawal limits are also significantly higher compared to savings accounts and are often aligned with the operational requirements of the business.
4. High Transaction Capacity:
Current accounts are intended for high transaction volumes, making them suitable for businesses that frequently move large sums of money.
5. Unlimited Withdrawals:
Account holders may make unlimited withdrawals, although transaction charges may be applicable in certain cases.
6. Overdraft Facility:
Many banks provide overdraft facilities on current accounts, allowing account holders to withdraw more than their account balance, up to a pre-approved limit.
7. Additional Services:
Depending on the bank, current accounts may also include features such as SMS alerts, debit cards, online banking, RTGS and NEFT facilities at no additional cost, and access to multi-location banking.
Conclusion
While current accounts do not provide interest on deposits, they offer a range of features and services tailored to meet the dynamic financial requirements of businesses. Their flexibility, high transaction limits, and service offerings make them an essential banking product for commercial entities.
