Open a Current Account

How to Open a Current Account?

Online Legal India LogoBy 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.

Who should 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.

Types of Current Accounts Offered by Banks

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.

  • Ideal for: Small shop owners, traders, consultants
  • Features: Zero or low minimum balance, easy withdrawals, internet/mobile banking
  • Offered by: SBI, ICICI, HDFC, Axis Bank

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.

  • Ideal for: Medium to large companies
  • Features: High daily transaction limits, priority service, lower charges
  • Examples: HDFC Premium Current Account, Axis Privilege Current Account

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.

  • Ideal for: Startups and SMEs
  • Features: Banking + business support tools
  • Examples: ICICI Smart Business Account

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.

  • Ideal for: Businesses that maintain higher balances
  • Features: Earn interest on idle funds
  • Examples: SBI Flexi Current Account

5. Foreign Currency Current Account

Used for international transactions, these accounts are maintained in foreign currencies like USD, EUR, GBP, etc.

  • Ideal for: Exporters, importers, and businesses with overseas clients
  • Features: Easy forex management, reduced conversion charges
  • Examples: HDFC EEFC Account, ICICI Forex Current Account

6. Specialised Current Accounts

  • Some banks also offer accounts for specific sectors like agriculture, NGOs, or professional services.
  • Example: SBI Professional Current Account for doctors, lawyers, and CAs

How to Open a Current Account?

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:

  • Transaction limits
  • Minimum balance requirement
  • Charges for deposits, withdrawals, or cash handling
  • Extra services like overdraft, mobile banking, or cheque books

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:

  • PAN card of the business or individual
  • Aadhaar card or other government-issued ID
  • Address proof (electricity bill, rent agreement, or Aadhaar)
  • Passport-size photographs

Additional Documents Based on Business Type:

Sole Proprietorship:

Partnership Firm:

  • Partnership deed
  • PAN card of firm
  • Registration certificate (if registered)

Private Limited Company / LLP:

  • Certificate of incorporation (from MCA)
  • Memorandum and Articles of Association (MoA & AoA)
  • PAN card of company
  • Board resolution authorising account opening

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).

  • Online Method: Fill in the form, upload scanned documents, and verify via video KYC (for individuals or sole proprietors).
  • Offline Method: Visit the bank with original documents and a filled application form. Book an appointment in advance to save time.

Step 4: Submit KYC Documents and Application Form

The bank will ask for your KYC (Know Your Customer) documents. Submit:

  • Identity proof
  • Address proof
  • Business proof
  • Passport-sized photos
  • Initial deposit check

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:

  • Open your current account
  • Share account number, IFSC code, and login credentials
  • Provide cheque book, ATM/debit card, and online banking access

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:

  • UPI and payment gateways
  • GST portal for tax payments
  • Accounting software for invoicing and bookkeeping
  • Credit card or loan services for business expansion

Benefits of Opening a Current Account

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:

  • Filing GST returns
  • Maintaining clean financial records
  • Applying for loans or credit in the future

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:

  • Free Demand Drafts (DD)
  • Bulk payment services
  • SMS/email alerts
  • Business debit cards and cheque books

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:

  • Regular current accounts for small businesses
  • Premium current accounts for high-volume businesses
  • Start-up current accounts with added benefits like no minimum balance for the first year

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.

Minimum Balance & Charges

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:

  • State Bank of India (SBI) requires ?10,000 to ?50,000, depending on the city and account type.
  • HDFC Bank current accounts may require ?10,000 to ?25,000 or more.
  • ICICI Bank offers various current accounts with minimum balance requirements ranging from ?10,000 to ?1,00,000.

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.

Top Banks Offering Current Accounts in India

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.

  • Minimum Balance: ?10,000 to ?50,000
  • Features: Free RTGS/NEFT, cash deposit at branches, and overdraft facility

2. HDFC Bank

Ideal for startups and MSMEs. Offers SmartUp accounts and various business account plans.

  • Minimum Balance: ?10,000 to ?25,000
  • Features: Free cheque book, net banking, bulk payments

3. ICICI Bank

Popular for its wide range of customisable current accounts.

  • Minimum Balance: ?10,000 to ?1,00,000
  • Features: Free cash deposits, foreign currency support, digital tools

4. Axis Bank

Offers current accounts tailored for SMEs, startups, and large enterprises.

  • Minimum Balance: ?10,000 to ?50,000
  • Features: Business debit cards, analytics, payment solutions

Common Mistakes to Avoid

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:

  • Exceeding free cash deposit/withdrawal limits
  • Extra cheque books
  • Demand drafts
  • RTGS/NEFT beyond the free quota
  • Branch visits and teller services

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:

  • Basic current account
  • Premium current account
  • Startup current account
  • Export-import current account

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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