Tips to Consider Before Opening a Current Account

July 31, 2025

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As of early 2025, India has over 10 crore active current accounts, with digital current accounts alone witnessing a 42% year-on-year growth—driven by small businesses, freelancers, and start-ups. With rising digitisation, choosing the right current account isn’t just about a chequebook and overdraft; it’s about unlocking smarter features like UPI integrations, API banking, cash flow insights, and real-time settlements.

Whether you're a solopreneur, SME owner, or managing finances for a trust or society, selecting the wrong type of current account can lead to unnecessary charges, inefficient transactions, and missed opportunities. This guide helps you make the right choice based on your business structure, cash flow needs, and technology preferences.

Factors to Evaluate When Selecting a Current Account

Choosing a current account goes beyond comparing fees. Here’s what you should consider when evaluating options:

1. Type of Entity You Are

Different current accounts are designed for different legal entities—individual (proprietors or freelancers) or non-individual (partnerships, companies, NGOs, societies, etc.). You can read this blog to know more about individual and non-individual current account.

2. Digital Banking Capabilities

Look for current accounts offering end-to-end digital onboarding and integration with accounting software. A good digital current account saves time, reduces errors, and enables real-time financial control.

3. Monthly Average Balance (MAB) & Charges

Banks typically require maintaining a Monthly Average Balance (MAB). Falling below this may incur penalties. Choose an account with an MAB that aligns with your cash flow pattern.

4. Transaction Limits and Fees

Check for limits on cash deposits, NEFT/RTGS charges, and third-party transfers. For example, with Ujjivan’s Maxima Current Account, you have the flexibility to select your preferable cash deposit limit.

5. Value-Added Features

Consider benefits like Overdraft facilities, feature-rich Debit Cards, SMS/email alerts bulk payment support (ideal for payroll or vendor payments).

Why You Need a Current Account for Business

Running a business without a current account is like trying to operate a factory without electricity. Here’s why a dedicated current account is essential:

Separation of Personal and Business Finances: This makes bookkeeping easier and ensures compliance during audits or tax filing.
Higher Transaction Limits: Unlike savings accounts, current accounts allow higher transaction limits—vital for businesses dealing with large daily volumes.
Professional Credibility: Payments made through a business account appear more legitimate to clients, vendors, and investors.
Ease of Borrowing: Banks often assess current account history when evaluating loans, overdrafts, or working capital finance.
Regulatory Compliance: For GST filing and input credits, a current account in the name of your business entity is often mandatory.

Ujjivan SFB offers a wide range of business current accounts – each meticulously curated to cater to your unique requirements.

Final Thoughts

In today’s fast-paced, digital-first business environment, choosing the right current account is a strategic decision. Whether you're a solo service provider, a growing D2C brand, or an NGO, your account should align with your operating style and scale. Prioritise digital accessibility, low fees, relevant features, and a bank that understands your business needs. Don't settle for a one-size-fits-all option—choose smart, bank better.

Disclaimer:

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FAQs

1. What is the difference between a current account and a savings account?

A savings account is meant for personal use and restricts transactions to encourage saving, while a current account is designed for businesses, allowing unlimited transactions and offering features like overdraft and higher cash handling limits.

2. Can a freelancer or individual open a current account?

Yes, freelancers and sole proprietors can open individual current accounts tailored to their professional income. These accounts often have simplified KYC requirements and support UPI-based invoicing, making them ideal for gig workers.

3. Are digital current accounts secure and reliable?

Yes, digital current accounts offered by RBI-regulated banks and NBFCs are secure, with encrypted transactions, two-factor authentication, and real-time fraud monitoring. Always choose a bank with strong cyber security protocols and transparent terms.

4. Can I link my current account to accounting software or payment gateways?

Absolutely. Many modern current accounts support integration with platforms enabling seamless invoicing, reconciliation, and real-time payment tracking to improve business efficiency.

Tips to Consider Before Opening a Current Account