Current Account - Explained in Hindi - YouTube

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Namaskar, my name is Mukul, and welcome to Asset Yogi.

Where we Unlock the knowledge of Finance.

In this video, we are going to talk about the Current Account.

A Current Account is an Account that is used by businesses and this facility is provided to Promote Businesses.

Especially, when the Number of Transactions per day or month is to a greater extent.

As we discussed in our previous video, how Savings Account is opened generally by Individuals.

And it is used to promote Investment and Savings.

Similarly, the Current Account is used for promoting Businesses.

To watch my video on Savings Account, you can find the link in the description below.

In this video, we'll talk about the main features of the Current Account.

Later, we'll look into the Pros and Cons of the same.

Then we'll answer some of the most common questions of the people.

For Example - I have a small business or I am a Shop Owner.

So, the number of transactions per day is high,

but most of the dealings are in cash so how much cash can I deposit in the bank?

So, that my taxes are minimized, or else how much cash can I withdraw in a day?

Or, many of you have this question about how many current accounts can you open - single or multiple?

So, In this video, we are going to answer all these questions.

Please watch this video from start till end. Let's move directly towards the Blackboard.

So, now let's first understand what is a Current Account and its Important features.

So, the Current Account is a Deposit Account and you can open it in any bank of your choice.

This Account is mainly meant for Business Purposes.

So, If you have a Business then a Current Account will be more suitable as compared to Savings Account.

Now, we'll see what are the reasons behind which I am saying that...

So, now if we understand the transaction inside a CURRENT ACCOUNT between a Company and a Bank.

So, Basically after opening a Current Account,

You can deposit money via Cash or any Payment that has to be taken by someone else in your Bank Account.

or If your business does some sales then you can deposit that money.

If you have taken any kind of loan then that money can be deposited in your account or even cash.

So, Money can be deposited into your bank account by any means and you need not handle any cash.

So, with this firstly you get the security from the bank and lot more benefits...

we are going to talk about those benefits..

You can also withdraw money from the bank.

So, a Current Account is a bit different from the Savings Account i.e., you don't get any Interest Rate in this.

You get an Interest Rate of 0% in Current Account.

But, In the Savings account, we get an Interest of 3-4% as discussed in the previous video.

So, this is what happens in the Savings Account. Right?

However, In the Current Account, we don't get any such Interest Rate.

You won't get any Interest on the Amount Deposited in the Current Account.

I have already made a video on Savings Account; you can watch that too.

Now, In the Current Account also you are supposed to maintain a Minimum Balance just like Savings Account.

So, there may be a requirement of Average Monthly or Quarterly Requirements.

Now, this limit can be however the Bank may impose.

Now, If we talk about SBI then SBI says to maintain a Minimum Balance of 10,000 Rupees per Month.

This amount may vary from 10,000 to 1,00,000 Rupees.

Depending on different banks and the facilities you require from that account.

If you want more facilities then you may maintain the Minimum Average Balance of 1-2 Lakhs.

You can make unlimited Transactions in a Current Account.

Now, as we discussed Savings Account and in there the Monthly or Daily transactions are limited.

beyond that, you may have to pay some additional charges...

Whereas, In the Current Account you can make Unlimited Transactions without additional taxes.

and No charges are imposed on a Transaction.

Although, Cash Depositions and Withdrawals might have a limit.

However, If you make transactions via Cheque or Online then there's no Limit - Neither Amount Nor Transactions.

So, you can transfer funds, or receive cheques or cash.

You also get facilities like Cheque Book, ATM Card, Debit Card etc.

All these facilities are quite common these days, you can get them in all the Accounts.

Then, you also get Online Banking Facilities like you can do Bank Transfers via NEFT/RTGS/IMPS.

All these facilities are available in both - Savings and Current Account.

You can check your Account Balance and Statements Online.

You can also pay bills online, and can also apply Standing Instructions with Bill Payments.

Standing Instructions means Let's say some payments are to be done in regular intervals or monthly like

EMI, Insurance Premium, Electricity Bill, Water Bill, Internet Bill - for all these you can apply Standing Instructions.

These payments will be automatically debited from your Current Account.

You also get over-draft facility

The over-draft facility is very good in a Current Account.

Now, If I try to explain this with an example

So, let's assume that you maintain a minimum account balance of 2 Lakh Rupees in your account.

and if your Transactions and Relationships are good enough.

Then the bank allows you to withdraw an additional amount of 50,000 Rupees in case of emergency.

This is what is known as over-draft.

Now, In this over-draft, you will have to pay some interest.

Now, this over-draft limit is sort of an Unsecured Loan.

This can also become a Secured Loan, but it usually is an Unsecured one.

If you take a Secured Loan, then your Interest Rate will be a little less.

And If you don't deposit any Security or FD then it will be an Unsecured Loan and Interest Rate will be a bit high.

I have already made a detailed video on overdraft and Cash-credit, you can watch that to get a detailed understanding.

Cash credit is also a type of credit facility and you can use it to manage working capital.

Or If you require some money for a short period for your business then you can take the Overdraft facility.

So, you won't get these types of facilities in a Savings Account.

Now, let's move forward and talk about cash withdrawal and deposit.

You can withdraw Cash via Cheque.

You can also deposit and withdraw cash for free without any charges.

But, In limit usually, there's a limit imposed by a bank per month and per day.

For Example - A bank can impose a limit of 25,000 per day.

Some banks may impose a monthly limit of 2 Lakhs on Cash deposits and Withdrawal.

So please check these limits, because beyond that you may have to pay some charges.

It's not like you won't be allowed to withdraw or deposit the cash it's just that you will have to pay some extra charges,

if the cash handling goes beyond the limit.

So, because of this reason banks rarely prefer to handle cash transactions

There's no limit on transactions via Online Mode or Cheques.

Now, Who can open a Current Account?

Anyone can open a Current Account - If you're doing Business Transactions or

Any other transactions too if the Number of Transactions is excessive.

So, you can open a Current Account. Any Individual can open

Hindu Undivided Family can open

Any Company can open be it Private Limited or Public Limited

Any Partnership Firm or Proprietorship

Institutions, Trusts, Associations, Govt. Departments

So, Anyone can open a Current Account where the Transactions are excessive.

Then, you'll have to pay charges for some special services.

Especially, In the case of Cheque Bounce or If you're unable to maintain a Minimum Balance

If you have to take out a Duplicate Statement from the Bank

Any Remittances - Like to produce a DD

these things demands some charges.

No charges are imposed on Online Banking

but there's a possibility some banks may impose charges beyond a transaction limit.

So, make sure you check these charges and open an Account in a bank If your transactions are of a great number

Then open an Account in a Bank where online banking charges are nil or minimal.

So, these are some important features of a Current Account.

Now, let's talk about the pros and cons of a Current Account.

Firstly, If you handle a lot of cash in your business then there's a risk of security.

If you deposit the cash in your account then the risk of security is reduced and it's a very big advantage.

It is Business-friendly and you can perform unlimited transactions

whereas, there are many limitations in savings account

Added to that if you have business transactions then

Your bank may question and insist if you are having a business and the no. of transactions are high

then open a Current Account.

So, If you are receiving any business transactions in your savings account then you may shift it to a current account.

I have already told you about the Overdraft facility.

Many a time there's an urgent requirement of money in Businesses.

So, you get the Overdraft facility and I have already explained that earlier.

Then it is easy to operate.

Now, If you handle only cash and someone says that they'll do the payment via Cheque or Online Payment.

So, If you don't have a Current Account then it may be difficult to do the transactions sometimes.

And you can easily carry out Online Banking.

Any Payment or Shopping or Online Money Transfer

Online Banking can be done via phone, Internet, or your Desktop.

You can also pay via Cheque and can withdraw cash via Cards.

Or you can also complete your transactions via Credit or Debit Cards issued to you.

So, it becomes easy for you and saves a lot of time as well.

Now, talking about Disadvantages so there's only one Disadvantage and that is

You do not get any Interest on the Deposits in your Current Account.

So, Many People make some Investments under this

Some people invest their money in Liquid Funds if there's an excessive amount

then the money can be invested in Liquid Funds or Short Term FD's.

So, In this way, you can manage your Investments.

Because if you're not getting any Interest on your Current Account, then

You can maintain the working capital of 2-3 Months

and all the extra amount can be Invested in some Investments

and as soon as they get mature, like your Short Term, FD matures

then you can transfer that amount again to your Account.

So, All these facilities are available and you can utilize them.

Now, If you want to open a current account then what all documents will be required?

Let's quickly look into that too.

First off you'll require the Application along with the photographs

If you're opening it for the Company then photographs of all the Directors.

Next is PAN Card - For yourself you'll require your PAN Card and for the Company then a copy of the Company's PAN Card.

Address Proof is also required.

If opening for a Company then you'll have to submit - Certificate of Incorporation and Memorandum of Association.

Whether it's for the company or a trust.

If you have a Partnership Firm then you have to submit a copy of the Partnership Agreement.

ID and Residence Proof of all the Partners.

Then you have to give a Cheque from your existing Savings Account of the Minimum Amount your Bank asks for.

For Example - If they ask you to maintain a Minimum Balance of 25,000 INR then they may ask for a Cheque of 25,000 Rupees.

Then you'll be asked for your Contact Details - Company's Communication Address,

E-Mail for communication via bank where the bank will send the Statements,

Mobile Number for Online Banking and receiving OTP's etc.

So, whosoever will be managing the account his/her details can be shared here.

Now, Let's talk about some Frequently Asked Questions related to the Current Account.

So, Do I have to pay any extra charges to open or maintain a current account?

So, A simple answer to this is No extra charges are required to open or maintain a current account.

How many Current Accounts can a Business Open? Many people have this question.

So, here most of the banks insist to open a single account only with one bank.

However, If you require multiple accounts then you can open them with different banks.

But, In that case, also you need to declare other Current Accounts

from where you enjoy credit facilities like overdraft, Cash-credit, or any type of Loan.

So, you'll have to declare all the other Current Accounts and also bring a NOC from therein.

The other bank should not have any objection to you having an account in other banks

and all the banks should know where your other accounts prevail.

Now, this issue is raised because of the increasing number of NPA's in Banks.

Many Corporates or Companies used to divert Money.

So, the rules are now more strict,

If you want to open multiple current accounts then you have to share the information with all the banks.

Is there a limit on the number of online transactions? - NEFT/RTGS/IMPS.

So, the answer is No! There's no limit and I have already told you about this earlier also.

However, In some cases when you have to transfer an amount larger than the limit then you might have to pay some charges.

Next is, I am a small business/shop owner. Should I open a current account?

Yes, you should open one as you can manage your funds better with that.

If you keep a cash at home or handle cash transactions then there's always an associated risk.

Savings Account has its own set of limitations - you can't perform a lot of transactions in there.

So, there's no harm in opening a Current Account if you're a Small Business owner or even a Shop Owner.

So, I think I have covered all the Important Points and FAQs related to the Current Account.

But still, if you have some doubts then you can ask them in the comments section below.

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Till then keep learning, keep earning, and stay happy as always.

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