Cost of opening a current account for my business is very important for you, as you will get an overview of the costing of the current account for your business. It will help you to take an informed decision for your business. Different kinds of banks serve different kinds of customers, and hence your business has to incur different kinds of costs. You are opening a current account in rural, urban or metro areas; it also plays a significant role in the costing of your current account.
Initial deposit:Cost of opening a current account for my business
Most of the time during current account opening, the bank will take some initial deposit which will be equivalent to or higher than the monthly average balance to be maintained by your business.
You need to deposit this amount through a CTS cheque from your savings account. The bank may debit the initial deposit first, or it may debit the initial deposit after opening your current account. Please do not give cash to open a current account.
Monthly Average Balance (MAB) or Quarterly Average Balance (QAB)
This is the average balance to be maintained in the current account every month. You may understand it by the average end-of-day balance to be maintained in a month. Some banks may use Quarterly Average Balance (QAB). However, this is your money your bank is holding. So you may also consider it as a Cost of opening a current account for my business. This amount varies from bank to bank and location of your branch in which you will open your current account.
Current accounts opened in rural areas have the least MAB or QAB.
Current accounts opened in urban areas have high MAB or QAB as compared to rural areas.
And Current accounts in Metro City have the highest MAB or QAB.
If you failed to maintain MAB or QAB, then the bank will debit a charge from your current account,
which is known as non-maintenance charges or NMAB. The amount of non-maintenance depends upon the amount of MAB or QAB. If MAB or QAB is high then NMAB or NQAB will be high.
Transaction Charges:
Every current account has a limit on cash deposits. Any cash deposit above that will be chargeable because the cash transaction involves human interaction. So if you deal in cash, please take care of the cash limit. Try to collect payment online, as cash transactions above the free limit will increase costs and lower your margins.
On the other hand, most of the banks give the facility of free online transactions so that customers can do transactions on their own, but when you do the same online transaction using the branch channel, then it will be chargeable. But if you want to transfer a big amount, then you have to do this using a branch channel. Generally this limit will be 10 lakh, but the bank may give a limit lower than this. This is decided during the opening of the current account.
Generally, it is advised to transfer funds up to 2 lakh using NEFT.
Above 2 lakh using RTGS and avoid IMPS because IMPS is not reversible.
Cheque Book and Debit Card Fees
Cheque book charges: every current account has some free cheque leaves. But after this free limit, cheque leaves are chargeable. Also, cheque leaves are mandatory if you want to do online transfers from the branch channel. Also, cheque leaves are important many times to submit proof of account details.
DD and PO charges: Different banks have different services on different kinds of current accounts. In some current accounts you get some discount, and in other types of current accounts you get a waiver for DD or PO creation.
Debit card charges: But in the case of a current account, a debit card may be useful; it may not be. So please confirm whether the debit card will work with your current account or not. If it is useful, then only opt for a debit card. Charges involved in debit cards are charges for issuance and then annual maintenance charges. After 5 years, the debit card will expire, and you need to take a new debit card. However, because there are many types of debit cards, the cost of debit cards may vary from card to card and bank to bank.
Other Charges
SMS Alert: SMS Alert is very important, as it will provide you information about any amount deposited and withdrawn from your current account instantly. SMS alert is very important, so please take care that it shall work properly.
Account statement: Account statement is generally free of cost if you opt for electronic form.But in case you need it for any official use, then you need to submit it after taking it from the branch with physical copy with stamp of the branch as proof provided from the branch, and then it will be chargeable.
Conversion fee
If your account receives foreign currency, then the bank may charge a fee for its conversion. So, if you are involved in an export or import business, then you need to open a special account for your business. In this way, you will have to pay a lower fee, and you can take advantage of hedging to save your business from currency fluctuation.
Other charges
There may be some other charges which your bank may take, which will increase the cost of your current account, like cheque bonus charges, cash management services, door-step banking, replacement fee for debit card, etc.
Leave a Reply