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What are the factors that you need to consider before opening a Current Account?
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Every business, no matter the size or type, requires a Current Account for smooth business banking transactions. And whether you are considering opening a Current Account online or offline, there are a few factors you need to consider before you commit to a specific Current Account for your business. Here are the most important ones.
1. Look at the Current Account minimum balance
Current Accounts have minimum balance requirements and do not offer interest on the balance. The required Average Quarterly Balance (AQB) might be anywhere above Rs 10,000. The type of Current Account you are opening and the features it offers will determine the current account minimum balance. A high AQB would unnecessarily tie up your operating capital, therefore you need to be careful. You need to look at the features being offered by the Current Account and if your business requires those. If not, then you can look at a Current Account with fewer features and a lower Current Account minimum balance.
2. Check the credit options available
You want to open a Current Account that offers easy access to both short-term and long-term credit. As a business, you will require quick funds several times either for working capital requirements or to undertake growth and expansion projects. Hence, take a look at the overdraft facility offered by the Current Account and also check if it offers collateral-free business loans. The limits for these credit options as well as the application and disbursal process are also something you should look into.
3. Consider the online banking infrastructure
In today’s day and age, most business transactions are carried out online, including banking transactions. Hence, it’s essential that the Current Account you opt for has a user-friendly net banking portal and mobile banking app. This will allow you to conduct most of your banking transactions online, such as funds transfers, bill payments, etc., without having to physically visit the branch. The more banking services the digital infrastructure allows you to access, the better it is as it will save you time and money that you can direct towards other business needs.
Additional Read: What steps should you take if you encounter any unauthorised transaction in your current account?
4. Review the associated charges
When looking at the Current Account benefits, it’s also important to look at the charges levied by the account. For instance, while most Current Accounts offer unlimited or higher transaction limits, beyond a certain number, a transaction fee may be levied. Similarly, if your Current Account balance falls below the minimum required amount, a non-maintenance charge will be levied, and you need to review in advance what that will be. Moreover, if the Current Account balance is above a certain limit, you can opt for the facility that automatically converts it into a fixed deposit to allow you to earn interest.
Once you have narrowed down on the Current Account you want to open, make sure to look at the Current Account opening documents. Having all the required documents in place would facilitate a seamless application process and would allow you to have an operational Current Account for your business as soon as possible.
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.
