Different customers have different types financial requirements. While some people have low to medium volume of banking transactions, many people have very high volume of transactions. And to meet the transactional requirements and convenience of such a wide variety of people, financial institutions have different type of bank accounts.
Most of us may have heard about Savings Account, Demat Account and similar such accounts, but somehow these do not satisfy the needs of people with heavy volume banking transactional requirements on a regular basis.And hence, for such heavy volume banking transactional requirement customers, banks recommend opening up a current account.
In addition to this and moving a step further, it is important to understand that a current account represents the import & export of goods and services, payments to foreign investors & transfers including foreign aid.
Let us take a deeper look at various aspects of current account.
A current account is a type of non-interest-bearing bank account that ensures a high level of cash liquidity. It is based on money flows and the accountholder is required to maintain a minimum amount in the account as specified by the banks. And in case the accountholder fails to do so, the banks are free to charge a pre-specified penalty. Secondly, it is the nature of current account to allow frequent and high-volume transactions such as deposits, withdrawals and contra transactions on a regular basis.
Also known as Demand Deposit Accounts, the current accounts offer a wide range of customized options to aid financial dealings.
The account is preferred and maintained by individuals who need to carry out higher number of transactions with banks and other financial institutions. People specifically involved in businesses such as sole proprietors, partnership firms, public and private companies, trust, clubs, societies&association of persons,etc., that require a large number of daily banking transactions, i.e., receipts and/or payments, prefer to have a current account. Apart from these, the current account can also be opened by Executors, Administrators and Liquidators, Hindu Undivided Family (HUF) accountholders, and more.
A current account can be opened in co-operative banks as well as any commercial or non-commercial banks. The interested customers just need to visit the closest bank and provide the executives with essential KYC (Know Your Customer) documents and fill in the ‘open current account’ form. The customers can even opt for an online current account if they desire.Essential documents (KYC) required to open a current account:–
Features of a current account
Benefits of current account
Below given are some common types current accounts that are offered by banks.
Standard Current Account: These non-interest deposit account requires the accountholder/ customer to maintain a minimum balance and a monthly average balance. The accountholders/ customer can enjoy all the electronic banking/internet banking/ SMS banking /mobile banking facilities such as SMS alerts, free Real-Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) & more. The accountholder/ customer also gets to enjoy cheque book, debit cards and similar facilities.
Premium Current Account: As the name suggests accounts are ideal for customers who have love to enjoy exclusive offers, perks and other benefits and those who need to carry out large volume of transactions. This means that the Premium current account is exclusively designed or customized to meet the requirements of accountholders with high level financial transactions.
Packaged Current Account: These accounts are becoming increasingly popular day-by-day. The reason for their popularity can be attributed to the innumerable perks the banks have to offer. The banks offer additional services such as travel insurance, medical support, car breakdown, credit card protection and more to accountholders opting for the account. However, the banks do charge pay a monthly fee for extending these facilities.
Packaged Current Account: Foreign currency accounts: This is bestsuited for accountholders who have to make business transactionsin foreign countries or with overseas customers.In other words, the banks offer Foreign Currency Accounts to NRIs or individuals who need to carry out frequent transactions in foreign currencies. The account allows the accountholders/ customers to hold foreign currency in a local account. A major advantageof foreign currency accounts is that it helps the accountholder in avoiding conversion costs.