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Uses of Current Account

A booming economy means both small and large scale businesses are flourishing. Due to a massive growth of consumerism, the market has become extremely demanding and to keep up with the pace, businesses today are conducted in a different way, where capital needs are dynamic, spontaneous and huge. And that is why primarily current account is used for commercial and business purposes as it provides the flexibility of depositing and withdrawing any amount of money, as many times in a day as needed.

Unlike savings accounts, current accounts are not interest bearing accounts and can only be operated with the help of cheques. According Reserve Bank of India regulations, banks are prohibited to pay any kind of interest on current accounts. The average minimum balance needed to be maintained is usually higher than savings accounts; however there is no daily limit set for either withdrawal or deposition.

With rising demand for better banking services both commercial and public banks provide current accounts along with various additional services and benefits for the ease of handling transactions of any nature and kind.

Some of The Better Known Uses of Current Account Are

  • No deposit or withdrawal daily limits, which helps the businesses to carry on any transactions seamlessly.
  • Bank provides overdraft facilities to the current account holders, a feature that is extremely helpful for businesses to meet any exigencies.
  • Current account holders can also build on the credit worthiness, information that the bank can provide to the other creditors and aid better credit facilities.
  • Most of the banks provide free of cost fund transfer within the different accounts within the same bank.
  • Banks especially private/commercial banks also provide ‘At par’ cheques, which gives the customer flexibility to transact or make payments free of cost across any location or branch of the same bank.
  • With centralized banking systems, current account holders can deposit and withdraw money from any branch located anywhere. Though there are limits on those transactions in case the transaction is done in any other location but the mother branch.
  • Some banks even offer the convenience of banking without having to visit the branch. There are pick up and delivery services for cheques and cash.
  • Current account holders also get few demand drafts and pay orders for free of cost on a monthly basis.
  • Some of the banks offer free NEFT and RTGS transactions for the current account holders.
  • Current account holders can manage the account online and it also provides the flexibility to transact abroad, hence saving hassle of money exchange.

Current account makes managing money really smooth for businesses, although the balance maintained is relatively on the higher side but there is no interest that gets accrued. However; as per RBI directives for current account that is held by a sole proprietor or an individual, in the event of death of the primary holder, the nominee would be paid interest on the balance of the current account from the day of the death till the payment is made as per the rates offered for savings accounts.

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