What is a zero balance current account?

Zero balance current accounts allow you to transact without maintaining a Monthly Average Balance (MAB), which can be quarterly in some cases. The MAB is the average closing balance you need to maintain in your account at the end of each day in a month. Not doing so may attract non-maintenance charges.

This type is ideal for startups and small businesses’ day-to-day transactions. It can increase your business’s liquidity and enable easy access to working capital through overdraft facilities or bank loans.

Why zero balance requirement is great for small businesses

Times can get really tough for small businesses, with irregular cash flow and limited funds at your disposal. Adding to that, the stress of maintaining a minimum balance or paying a non-maintenance fee, no matter how small, does not help. You don’t even earn interest on the minimum balance in your current account. That’s why a zero balance account can meet your business’s banking needs without added stress. It is a financial inclusion initiative for small businesses, as the government aims that no business should go unbanked.

Current account eligibility and documentation requirements

There aren’t any specific eligibility criteria for opening a zero balance current account. However, different banks may have different criteria. Typically, you may have to furnish basic documents such as:

• PAN card
• Proof of identity, communication, and residence
• Proof of business – certificate of incorporation, partnership agreement, or memorandum of association
• Color photographs

Benefits of zero balance current accounts

There is no way a business can function without a bank account now, and current accounts are perfect for businesses of any size or type. Here are the most prominent benefits:

• Easy access to liquid funds: Your business can access its funds whenever needed without any withdrawal limits.
• Unlimited transactions: You can send and receive as many payments as you need.
• No minimum balance: You don’t have to worry about any of your funds getting stuck in a minimum balance requirement.
• Better money management: The bank maintains a record of all your transactions, and you can easily get this information to keep track of your business’s finances.
• Leverage online banking: Having a current account allows you to also take advantage of online banking services to run your business smoothly.
• Get value added service: Your current account records can be seen as a reflection of your business’s trustworthiness. This can make you eligible for overdraft and loan facilities to help you out in times of need.

Combine your current account with powerful payment solutions

While you benefit from the flexibility of a zero balance current account and online banking, you can also provide your customers with the option to make purchases using more than 150+ digital payment modes. It takes only a few minutes to integrate PayU’s payment solutions on your website or app and start receiving payments into your current account. Your customers will be happier with the smoother checkout experience and you can track all your payments and settlements from the simple PayU dashboard.

Click here to know more about PayU’s payment solutions.

FAQs

What is a Zero Balance Current Account?

A zero balance current account is a bank account suitable for individuals and businesses conducting numerous daily transactions. The USP of a zero balance current account is that it doesn’t have a Monthly Average Balance requirement. It is suitable for small businesses that are typically strapped for funds.

What are the different types of current accounts?

There are many types of current accounts, like standard, package, or foreign currency. Zero balance current account is another type which is very beneficial for small businesses as it does not have a minimum balance requirement among other benefits.

What are the benefits of a zero-balance current account?

A zero balance account –

• has no withdrawal or transaction limits
• doesn’t have a minimum balance requirement
• allows account holders to access overdraft and credit facilities
• provides other benefits such as chequebooks, online banking, and more

Can I open a current account online?

While it may depend from bank to bank, it is possible to open a current account online. However, the process and documentation requirements for opening a current account may differ.

What is the purpose of a zero balance account?

A zero balance account (ZBA) is a type of corporate checking account that allows you to go down to zero balance. It is usually linked to a primary account that moves money in and out of the ZBA when transactions occur.

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Types of current account

While opening a current account, you should be thoroughly familiar with your needs. The types of current account include:

Standard current accounts

This is a non-interest account with minimum balance needs and a predefined monthly average balance. Other benefits could include free RTGS and NEFT transactions, SMS banking, internet banking, etc. Chequebooks, debit cards, an overdraft facility, etc., are all provided.

Packaged current accounts

The packaged accounts provide accountholders with a variety of benefits. It also includes other services like roadside help, medical care, and travel insurance.

Single column cash book

As the name suggests, it is a cashbook that keeps track of daily transactions in distinct columns for debit and credit. It is appropriate for businesses that don’t maintain bank accounts. Daily transactions are permitted by these accounts, although they lack features like an overdraft facility. 

Premium current accounts

For account holders, premium offers special discounts and perks. The account offers a wide range of personalized options and is typically appropriate for people who conduct significant financial activities.

Foreign currency accounts

A foreign currency account is the best choice for people or businesses who frequently need to conduct transactions in foreign currencies.

What is the difference between a current and savings account?

An essential condition for starting a business is having an active bank account. To meet the varied demands of businesses, banks now provide a multitude of alluring offers and incentives on current accounts. The following are some of the fundamental characteristics of a current bank account contrasted with a savings account:

• Allows countless transactions
• Requires a higher minimum balance
• Eases frequent transactions such as money transfers, cash withdrawals, and check deposits.
• Operated by individuals, private and public companies, trusts, associations, etc.
• Unlimited number of transactions per day
• Penalty fees may apply if the minimum balance is not maintained.
• The same KYC rules apply to savings accounts also apply to current accounts.
• There cannot be multiple current accounts for a single firm.

Documents required for current account 

Usually, you may need documents such as:

• PAN card
• Address proof
• Partnership agreements for partnership firms
• ID and address proof of all the partners
• Passport size photo of the applicant
• Cheque from an existing savings account 

But again, these documents may vary from bank to bank.

Note: Verify that your KYC documents are still valid on the submission date. 

Conclusion

A current account is beneficial when you need quick transactions, unlimited withdrawals, deposits, overdraft facilities, etc. It is a must for business accounts now. Additionally, current accounts allow you to pay debtors using the check feature of the bank. current accounts often don’t pay interest and have greater minimum balance requirements in contrast to savings accounts. Nevertheless, the greatest benefit of a current bank account is the simplicity with which account users can use up to a certain amount of overdraft.

FAQs

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