A current account is a must for businesses for their different financial needs. Business entities of all kinds majorly use a current account for their banking needs. A current account provides services for all types of business based on requirements. Be it a start-up, established company, etc.…facilities like bulk transactions, overdrafts, etc. are required by all of them.
But having a current account is not always a rosy picture. Like every other scenario, current accounts have their own pros and cons. To know more about them, keep on reading the article.
To start on a positive note, let us first look at the advantages of having a current account. They are enlisted as below:
- Transaction capacity and amount
The transaction limits are way higher for current accounts than any other bank account. Corporates have a higher amount of day-to-day transactions with huge cash deposits and withdrawals. A higher limit is therefore needed in corporate banking as opposed to the personal one.
- Services
The banking services offered for both personal and corporate banking are lucrative and beneficial in nature. However, corporates get a lot more than usual. A current account offers tailor-made services to fit the business needs of these clients and can also accordingly customize these based on business requirements. Personal banking offerings, on the other hand, are great but are standard and set in nature and are not usually customized as per an individual’s needs.
In India, businesses can have access to a lot of waivers, overdraft, and demand-draft facilities, higher amounts of issued cheque books, ease of foreign trade, etc. through their current account. While benefits are available in both these types of banking, a corporate may have a host of many other benefits and specialized services due to the nature and need of a business.
- Loans
A current account enables businesses to get loans that have a higher amount than the loans needed by individuals for personal banking through their savings account.
- Interest rates
Corporate banking has lower interest rates than personal banking, which is helpful for taking loans of significant amounts.
While there are many advantages to having a current account for your business, the few cons can certainly not be ignored. Let us have a look at some of the disadvantages of a current account:
- High charges on banking services
The services charges that are levied by the banks for a current account are way higher than a normal account used for personal banking. These charges may prove a burden if you do not make sure you’re availing only those services which are essential for you.
- High amount of Monthly Account Balance (MAT) for maintenance
Failing to maintain this MAT or Quarterly required minimum amount in your current account, can attract charges.
- Limits on the amount of free cheque books and demand drafts
After a certain number, any additional orders for cheque books and demand drafts are charged.
- Limits on the number of cash withdrawals
There is a cap on the maximum number of times you can make fund withdrawals in a day.
- Transaction fees
The fees for these business transactions are huge and in order to avail other services, you may need to shell out additional bucks.
- The financial paperwork and official documentation
These processes are time consuming and complex. They may require the help of a professional or a team of professionals, in the case of giant companies.
Disclaimer: The above article is subjective and generic in nature. The pros and cons may differ based on the facilities offered by your bank.