Current Account: All you Need To Know About.

Last Updated on September 2, 2021

A business has to do a lot of transactions. But you may know that there are various restrictions imposed by the bank regarding withdrawals and transactions. It was creating problems for the business class, who used to have enormous transactions. To solve these problems, the concept of the current account was introduced. And trust me, it was a revolution in the banking industry!

Want to know about this magnificent innovation? Here you go.

Table of Contents

What is a Current Account?

It is a type of bank account that companies, firms, businessmen, etc. generally use due to their frequent and huge transactions (inward and outward transactions) with the bank. Due to its huge popularity, it is the most common in any commercial bank. Other accounts provide facilities for deposits, withdrawals, etc. Similarly, current accounts provide these facilities. However, there are some features that make them different from others.

Before moving ahead towards the advantages and disadvantages, let us know the different types of accounts offered by different banks. 


It is rightly said that the customer is king. The same applies to banks as well. And every customer has a different set of expectations and requirements. To cover these requirements, the banks generally offer 5 types of current accounts.

  • Standard Current Account: It is the most commonly used account for business purposes. Here, the customer has to maintain a minimum monthly balance. Due to frequent transactions, banks do not offer interest on the deposited amount. 
  • Basic Current Account: It is suitable for the customer whose income is not substantial such as pensioners or young people. It is suitable for customers to manage their finances. However, one must remember that it might come with a daily cash withdrawal limit. To conclude, you can consider it an extension of a savings account.
  • Premium Current Account: It is designed for people who generally have very high-value banking transactions. So, it provides exclusive banking facilities to business users.
  • Packaged Current Account: Just as its name, it is a complete package for a business. Sounds exciting, right? It not only fulfils its basic purpose but it comes bundled with other features like medical support, travel insurance, etc. So, you don’t have trouble while searching for these facilities.
  • Foreign Currency Current Account: Only Indian residents can open the above accounts. Don’t you think that it will be unfavourable for the non-residents? That’s where the Foreign Currency Account comes to the rescue. It solves the problems of NRIs or the people who have frequent transactions in foreign currencies.


As mentioned above, it is popular among companies, businessmen, etc. It is so because it offers a lot of advantages to business users.

  • No transaction limit: There is no limit on the number of transactions. Therefore, the customer can carry a large number of transactions daily. So, you can focus solely on business without worrying about the transaction limit.
  • No prior notice: Customers can withdraw money and deposit money without giving any notice to the bank. So, you can transact at your convenience.
  • The account holder can issue a demand draft.
  • There is no limit on the number of deposits in the home branch.
  • Overdraft facility: The best feature that makes current accounts unique is that they provide overdraft facility. The overdraft facility allows a customer to make payments over the balance present in the account. For example, you can withdraw Rs 50k, even when you have a balance of Rs 40k. But use the facility carefully. Else, you may have to pay interest on the outstanding balance.
  • No limit on cash transactions: There is no limit on the cash that a customer can withdraw. However, it should be as per the banking cash transaction tax, if applicable. 


Like a coin, everything has two sides. A current account is no different. If they had no disadvantage, everyone would have opened a current account. But that is not the case. It is so because it misses out on a few things. Below mentioned is the list of demerits:

  • No interest: The customer does not get any interest on the available cash balance in the bank account. It may discourage people to save money.
  • Extra charges: If the customer wishes to avail of extra service, then he has to pay extra as a service charge to the bank. 
  • Specified Limits: There is a limit on the number of cheque books and demand drafts that one can issue in a month. But thanks to modern payment methods like NEFT and UPI, this limit is also considered sufficient by people.
  • Minimum balance: The account holder has to maintain a minimum monthly balance failing on which he might have to bear the penalty charged by the bank.

The minimum balance requirement varies from bank to bank. In some banks, you have to maintain an Average Quarterly Balance. While other banks may require you to maintain an Average Monthly Balance. But many people may not maintain the minimum balance. Don’t worry. There is a facility of Zero Balance Account. Here, you don’t need to maintain a minimum balance. So, you can transact without any restrictions!

Current Account vs Savings Account: Which one is Better?

If you would have read till here, you may know the answer. And the correct answer is: It depends on your requirements.

Here’s a summary of the differences between them:

Current AccountSavings Account
No interest is paid by the bank.Bank pays a nominal interest to the customer.
There is no limit on the number of transactions.Limited transactions are allowed.
It is generally used by business class.It is used by the general public. 
A high minimum balance is to be maintained. But there are zero balance accounts as well.You can maintain a low minimum balance. It depends from bank to bank.
Overdraft facility is available.Overdraft facility is not available.
Even companies and firms can open a current account.It can be opened by individuals only.

Each of them has its own set of merits and demerits. So, consider them while choosing the type of account you want to open. This way, you will be able to reap the best out of them.


Thus, having a current account is definitely a good choice. Especially, if you fulfil its criteria. The benefits that you can derive are endless and the cost for the same won’t break your bank.

So, it’s time to get in touch with your banker and open a current account of your choice, considering your requirements. You can have a look at Best Current Account – A quick guide for an entrepreneur to know how to choose the best among all.

Don’t know how to open one? Arrange these documents and you are good to go