In India, there are typically four types of bank accounts namely Savings Account, Current Account, Recurring Deposits Account, and a Fixed Deposit Account. All of them cater to a particular audience group and have different rules to manage your hard-earned money in a safe and secure manner.
In Economics a Current Account is defined as an account with a banking firm or organisation from which money can be withdrawn without notice, typically an active account catering for frequent deposits and withdrawals by cheque. Usually, anybody who is handling the financial affairs of a small, medium or the large corporation or is an entrepreneur, trader or a businessman will explain to you in depth how important and popular “Current Accounts” are in their fraternity.
Businesses are regularly involved in large transactions and with the kind of benefits and convenience most banking institutions offer on their current accounts, it makes sense for them to opt for them as compared to the much more traditional Savings Account which usually caters to the salaried class where they receive interest on their deposits over a particular period of time.
Here in this article, we have listed seven Benefits of having a Current Account instead of a personal Savings Account:
A traditional Savings Account will usually allow you to withdraw only a specific amount at any given time of the day which will be a constraint in your day to day commercial business dealings. Current accounts in most major banking institutions will give you the flexibility to carry out transactions without any restrictions or limitations (specific charges levied by the bank/government.)
In case of an emergency or an urgent requirement, the bank will allow you to obtain short-term borrowings which are referred to as a Bank Overdraft. It is a boon for several small and medium-sized companies or enterprises as and when the need arises.
Maintaining a Current Account in the name of the business will go a long way in maintaining the reputation as well as the legitimacy and prestige of the business among its business associates as it exudes professionalism in all dealings due to the stakes involved in such transactions.
Some of the services offered by the Current Accounts are similar to those offered by a Personal Savings account but features like doorstep banking, round the clock phone banking, and mobile alert services are the USPs that are inherent to a Current Account. Also since the banks don’t have to pay any interest to the account holder, they usually make an extra effort to make its offerings more lucrative and deliver maximum benefits in order to retain the account holders business.
Opening a separate Current Account along with a simultaneous Savings Account is highly beneficial to a freelancer or an entrepreneur as they will be capable of keeping separate tabs on their personal and business expenses and spending. By accessing the transactional details directly from the Current Account, they can get a clear picture about the profit/loss of their business and can readily furnish the financial data to the financial authorities or auditors as and when required. Since they are operating two different accounts simultaneously, advantages of both the accounts could be availed as and when required without losing out on lucrative offers that come up from time to time.
In a majority of the cases, if the banking institution has a decent enough experience with the account holder, they can avail bank guarantee services. This can be very useful for traders or system integrators as they have to furnish bank guarantees while filling out government or private tenders.
With most of the reputed banks, it is possible for the account holders to operate the same current account from different locations. This is useful mainly for large and medium corporations operating at different geographical locations as well as ventures aspiring to make a mark at multiple locations.
India is currently at the forefront of the start-up spectrum and multiple businesses are popping up and hence most of the major banks are competing to get their business. The banks have decided to align themselves with the Make in India initiatives which specifically focus on the MSMEs and the rural sector which was never an area of major interest for them.
This has ultimately resulted in healthy competition among the major banking corporations which are offering lucrative schemes and functionalities on their respective Current Accounts. The decision ultimately falls on the prospective account holder to opt for the one which will ultimately benefit their business in the long term.
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