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19 Jul, 2025
By Online Legal India
Published On 12 Dec 2022
Updated On 28 Jun 2025
Category Private Limited Company
Opening a current account is the first smart step for any business owner or freelancer in India. It helps you manage daily transactions, receive payments, and build financial credibility. Unlike savings accounts, current accounts come with higher transaction limits and specialised business features. Most banks like SBI, HDFC, and ICICI offer easy online and offline application options. In this article, you will learn how to open a current account.
A current account is ideal for anyone who handles frequent and high-volume business transactions. It is specially designed for business owners, startups, freelancers, traders, private companies, partnership firms, NGOs, and even professionals like doctors, consultants, and lawyers. If you run a shop, sell products or services, or accept client payments regularly, a current account helps you separate your personal and business finances. It allows unlimited deposits and withdrawals, access to overdraft facilities, and easy online payments—all without interest on the balance, as it is meant for daily use.
Banks like SBI, ICICI, HDFC, and Axis Bank offer customised current accounts based on the business size and need. Opening a current account builds financial credibility, simplifies GST payments, and makes it easier to apply for business loans in the future.
Here are the types of current accounts offered by banks:
1. Standard Current Account
This is the most basic type, suitable for small businesses, startups, and freelancers. It allows unlimited transactions, cheque book facilities, and access to digital banking.
2. Premium Current Account
Designed for businesses with high-value transactions. It comes with extra features like higher free cash deposit limits, free demand drafts, and dedicated relationship managers.
3. Packaged Current Account
These accounts include bundled services like free GST payment support, legal advice, and tax filing help, along with regular banking features.
4. Flexi Current Account
Also known as auto-sweep current accounts, these accounts allow any surplus balance to earn interest by transferring it to a linked savings or fixed deposit.
5. Foreign Currency Current Account
Used for international transactions, these accounts are maintained in foreign currencies like USD, EUR, GBP, etc.
6. Specialised Current Accounts
Here is the step-by-step guide to help you open a current account easily:
Step 1: Choosing the Right Bank and Account Type
Start by selecting a bank that meets your business needs. Consider:
Most major banks like SBI, HDFC, ICICI, Axis Bank, and Kotak Mahindra offer a variety of current account options.
Step 2: Gather Required Documents
The documents you need may vary depending on your business type (sole proprietorship, partnership, company, etc.). Here is the list:
For All Types of Accounts:
Additional Documents Based on Business Type:
Sole Proprietorship:
Partnership Firm:
Private Limited Company / LLP:
Step 3: Visit the Bank or Apply Online
You can either visit the nearest bank branch or apply online (most private banks offer online account opening portals).
Step 4: Submit KYC Documents and Application Form
The bank will ask for your KYC (Know Your Customer) documents. Submit:
For companies and partnerships, you may need to submit a business stamp/seal and signatures of all authorised signatories.
Step 5: Bank Verification and In-Person Visit (if needed)
Once you have applied, the bank will be verifying the documents. In some cases, especially for high-value accounts or companies, a bank official may visit your business premises for address verification. The banks may ask for a minimum deposit amount to activate the account.
Step 6: Account Activation
Once verification is complete, the bank will:
Your current account is now live and ready for transactions!
Step 7: Link Your Current Account with Other Services (optional)
Once opened, you can link your account with:
The details below include the benefits of a current account:
1. Seamless Day-to-Day Transactions
One of the biggest advantages of a current account is that there is no limit on the number of transactions you can do in a day. You can deposit or withdraw money as many times as needed, perfect for businesses that deal with high volumes of payments. For example, paying suppliers, receiving customer payments, and making utility payments—all from one account without restrictions.
2. Helps Build Business Credibility
Having a dedicated current account creates a professional image. When you issue or receive payments through a current account, it shows that you are running a legitimate business. It separates personal and business finances, which helps you maintain financial clarity and avoid confusion. It is useful for freelancers, small business owners, consultants, and start-ups.
3. Overdraft Facility
Most banks offer an overdraft facility with current accounts. This means you can withdraw more money than you have in your account, up to a certain limit. This is very helpful when you face short-term cash flow issues. Overdraft is subject to bank approval and may involve interest.
4. Makes Business Accounting Easier
Using a current account makes bookkeeping and tax filing much easier. You can track all your business transactions in one place. Banks also provide detailed monthly statements and digital records, which are useful for:
Many current accounts integrate with accounting software like Tally or Zoho Books.
5. International Transactions & Forex Support
Many current accounts support foreign currency transactions, which is essential if you deal with international clients. Banks provide currency conversion, export-import services, and foreign exchange support to current account holders.
6. Digital Banking & Value-Added Services
Current accounts come with online and mobile banking features. You can transfer funds, pay bills, and manage payroll easily. Some banks also offer:
These services help you manage everything on the go.
7. Customised Account Options
Banks offer different types of current accounts based on your business size and needs. For example:
8. No Interest, But More Features
Unlike savings accounts, current accounts do not earn interest. But they offer flexibility, higher transaction limits, and business-specific features, which make up for it. For any growing or established business, these features are more valuable than earning a small interest.
A current account is essential for businesses to manage day-to-day transactions smoothly. However, unlike savings accounts, most current accounts require you to maintain a minimum balance. If you fail to do so, penalty charges may apply.
What is Minimum Balance?
Minimum balance is the lowest amount of money you must keep in your current account every month or quarter. This requirement varies from one bank to another and depends on the type of current account.
For example:
What Happens If You Don’t Maintain It?
Banks charge a non-maintenance penalty, usually ranging from ?500 to ?1,000 per month (plus GST), if your balance falls below the required limit. These charges vary by bank and location.
Tip to Avoid Charges
Choose a current account that matches your business size. Some banks offer zero balance accounts for startups or customised options with flexible conditions. Always read the terms carefully to avoid hidden charges.
Here are the top banks in India that offer reliable and feature-rich current account services.
1. State Bank of India (SBI)
SBI is one of India’s most trusted banks. It offers different current account types based on business needs—Basic, Gold, Diamond, and Platinum tiers.
2. HDFC Bank
Ideal for startups and MSMEs. Offers SmartUp accounts and various business account plans.
3. ICICI Bank
Popular for its wide range of customisable current accounts.
4. Axis Bank
Offers current accounts tailored for SMEs, startups, and large enterprises.
The details below include the most common current account mistakes and how you can avoid them.
1. Not Maintaining the Minimum Balance
One of the most common mistakes is not maintaining the required minimum balance in the current account. Most banks in India require a Monthly Average Balance (MAB) or Quarterly Average Balance (QAB) ranging from ?10,000 to ?1,00,000, depending on the type of account and location. Failing to maintain this balance can result in non-maintenance charges, which can go up to ?1,000 or more per month, plus GST. Always choose an account type that suits your income level and business volume. Some banks also offer zero-balance current accounts for startups and small businesses.
2. Using the Current Account for Personal Expenses
A current account should be strictly used for business-related transactions. Mixing personal and business expenses can lead to confusion during tax filing and make your business finances look unprofessional. It also becomes difficult to analyse profit, loss, and cash flow if the account includes both types of expenses. Keep your personal savings account separate and use the current account solely for business payments, collections, and operational costs.
3. Ignoring Transaction Fees and Hidden Charges
While current accounts allow multiple transactions, not all services are free. Many banks charge extra for:
These charges can add up over time and eat into your profits. Carefully read the fee structure before opening an account. Choose a bank and plan that offers the most benefits based on your usage.
4. Not Checking Statements Regularly
Some account holders do not review their monthly statements or bank notifications. This can result in missed fraudulent activity, undetected unauthorised charges, or errors. Set up SMS and email alerts for every transaction. Always review your bank statement once a month or use mobile banking apps to keep track.
5. Choosing the Wrong Type of Current Account
Banks offer various types of current accounts such as:
Choosing the wrong type may result in higher charges or fewer benefits than what your business needs. Talk to a bank advisor before opening an account. Compare features like free transactions, overdraft limits, and online tools across different banks.
6. Ignoring Overdraft Terms and Conditions
An overdraft facility allows you to withdraw more money than you have in your account, up to a pre-approved limit. But if you are not careful, this can lead to high interest costs or even rejection of future credit applications. Use the overdraft facility wisely and always repay on time. Understand the interest rates, repayment timelines, and processing fees beforehand.
7. Not Upgrading as the Business Grows
Many business owners continue using the same current account they opened during their startup stage, even after their business grows. This could mean missing out on features like higher cash limits, better digital tools, or credit options. Review your current account every 6–12 months and upgrade if needed.
A current account is not just a bank feature, but a smart move for serious business growth. With the right account, you gain flexibility, credibility, and control over your finances. Avoid common mistakes, choose wisely, and let your business banking work as efficiently as you do. In this article, you learned how to open a current account in detail, along with common mistakes to avoid. Contact Online Legal India to get assistance and support in filing a current account application from professional experts.
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