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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Have you recently opened an offline or online Current Account? Well, now that you are through the process of setting up this essential account for your business and all your Current Account documents are in place too, let us take a quick look at how to make the most of it.
1. Make use of the mobile app
Since you have your phone on you for most part of the day, downloading your bank’s app to manage your online Current Account will come in handy. While it may take some time in the beginning to familiarise yourself with the app, once you are past it, you will find it convenient to manage your Current Account payments, keep track of your balance, etc., through the app.
2. Avoid fees and charges
Different Current Account transactions come with different fees depending on the type of Current Account you have and the bank you have it with. It is essential to be aware of these fees in advance so that you can avoid them as much as possible. Every Current Account comes with a set limit of free cash withdrawals from non-home branch ATMs, free demand drafts and pay orders, free cash deposits, etc. Make sure to know the free limit in terms of both the transaction frequency and the transaction amount.
3. Maintain one Current Account
Many entrepreneurs often opt for multiple Current Accounts, thinking that it will help them categorise their spending and manage their business transactions more effectively. However, often, the opposite happens. If you maintain one Current Account only, it will be easier for you to always have a clear idea of your business’s cash inflows and outflows since it is centralised in one place. It may also turn out to be less time-consuming. You can also check if your bank provides the facility to club or consolidate multiple Current Accounts and savings accounts. This feature provides the flexibility to maintain the minimum group Average Quarterly Balance (AQB) in any one or more of your accounts.
Additional Read: Will a current account be closed if it has zero balance?
4. Explore home-banking services
Current Accounts often come with features and additional services that will be helpful for your business. For instance, the home-banking service involves cash and cheque pickup and delivery from your home or office on demand. Again, this service may be free of cost up to a certain number of times a month and then be chargeable post that.
5. Capitalise on excess funds
While most business owners think of overdrawing funds due to the overdraft facility in Current Accounts, there is also a possibility that sometimes you may have excess funds in your Current Account. Instead of letting that money sit idle, you should opt for the sweep-in facility that converts your excess funds in your Current Account to Term Deposit. This allows you to earn interest income.
Since you know your business and your transaction patterns, think of a system that will easily be integrated into your day-to-day life for keeping a track of your Current Account transactions and expenses. Out of all the things you should do in relation to your Current Account, this perhaps is the most important.
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