Why Choose a Current Account?
A current account is the top pick for professionals, businesses, associations, trusts, societies, and institutions. It offers numerous advantages over traditional savings accounts. With its flexibility and unlimited transactions, it’s the preferred banking option for businesses, traders, professionals, and institutions.
Businesses usually avoid standard savings accounts because of their restrictions and limitations. Instead, they go for current accounts, enjoying the freedom from transaction limits and the added benefit of maintaining liquidity.
Why Open a Current Account for a Private Limited Company (PLC)?
When a Private Limited Company (PLC) is incorporated, it receives a PAN number. It’s advisable for the PLC to then open a bank account under its name, taking advantage of its separate legal entity status.
Though not mandatory, opening a current account in the company’s name has its perks. It ensures that all company transactions happen through the designated current account, keeping business finances separate from those of directors or promoters. Plus, a PLC can opt to have multiple current accounts, which helps in better financial management.
The current account of a Private Limited Company (PLC) carries immense importance due to its legal entity status under Indian laws. It’s crucial for tax compliance, smooth transactions with creditors and debtors, salary and dividend disbursement, handling legal matters, and settling accounts during liquidation.
Maintaining a current account in the company’s name not only ensures the smooth flow of financial activities but also boosts the credibility and trustworthiness of the company’s financial dealings.
Steps to Open a Current Account for a PLC
Opening a current account for a PLC is a simple process, as outlined below:
1. Visit the bank branch or access the bank’s website online to start the current account opening process. Many banks offer the option to open a current account online.
2. Choose the ‘Business Current Account’ option on the bank’s website. Review the features of different types of current accounts and select the one that suits your needs. Then, click on the ‘Apply Now’ button and fill out the application form. Alternatively, you can visit the bank branch to obtain and fill out the application form manually.
3. Once you’ve filled out the application form, submit it online by clicking the submit button (if applying online). If applying offline, submit the filled application form at the bank branch.
4. After submitting the application form, a customer care executive from the bank will contact the company to finalize any remaining formalities.
5. Ensure all necessary documents are provided to the bank for opening the current account.
6. After completing the KYC verification process, the bank will proceed to open the current account in the company’s name.
Required Documents for Opening a Current Account for a PLC
To open a current account for a PLC, you’ll need the following documents:
– Certificate of Incorporation of the PLC.
– Memorandum of Association (MOA) and Articles of Association (AOA) of the PLC.
– Board Resolution approving the current account opening and appointing authorized personnel to manage the account.
– Power of Attorney issued to company officers, employees, and managers for conducting business transactions on behalf of the company.
– Directors Identification Number (DIN) of the company’s directors.
– PAN card of the PLC.
– Updated list of directors in the bank’s prescribed format.
– Proof of registered address, such as:
– Recent electricity or telephone bill (not older than three months).
– Registration copy with Employee Provident Fund Organization (EPFO) or Employee State Insurance Corporation (ESIC).
– Any other government registration/license showing the company’s address.
– Identification proof of directors and authorized signatories, including:
– PAN card of directors.
– Passport.
– Voter ID card.
– Driving license.
– Aadhaar card.
– Evidence of director appointment in case of changes.
– Documentation confirming director resignations if there are Board changes.
– Shareholding pattern of the PLC as per the bank’s format.
– Details of beneficial owners, if applicable.
Benefits of Having a Current Account for a PLC
There are several unique advantages to maintaining a current account for a PLC:
1. Overdraft Facility: Current account holders can access an overdraft facility from the bank, assisting in meeting the company’s working capital needs.
2. No Minimum Transaction Requirements: Unlike some accounts, there are no requirements for minimum transactions, giving flexibility to the current account holder.
3. Organized Business Transactions: A current account helps in organizing business transactions and simplifying the taxation process.
4. Credit Card Transaction Tools and Online Banking Support: Current account holders have access to credit card transaction tools and comprehensive online banking support.
5. Unrestricted Deposits and Withdrawals: Current account holders have the freedom to make deposits and withdrawals as needed to manage the company’s cash flow.
6. More Free Cheques: Typically, current account holders receive a higher number of free cheques each month, reducing transaction costs for the PLC.
7. Convenient Transfers and Deposits: Current accounts allow for easy transfers and deposits across different branches, making it convenient to collect payments from smaller customers.
8. No Interest Earnings: While current accounts do not earn interest like savings accounts or recurring deposits, they offer convenience despite relatively higher charges.
