What is Zero Balance Current Account and How To Open It Online?
A current account is the recommended bank account type for businesses which deal with high-volume transactions on a regular basis. A zero balance current account can be beneficial for most account operators as it has no requirement to maintain an Average Monthly Balance (AMB). Hence, withdrawals and deposits are done with more ease.
Here are the features, benefits and how to open a zero balance current account. Read on!
What is a Zero Balance Current Account?
A zero balance current account is ideal for all kinds of businesses and individuals as it requires no Monthly Average Balance, which increases its liquidity. A current account provides no interest on the deposit amount, and it is most ideal for businesses and companies that deal with large value transactions throughout the day.
A zero balance current account enables businessmen to carry out financial transactions smoothly, which leads to a significant increase in a company’s productivity.
Features and Benefits of Zero Balance Current Account
A zero balance current account has its unique features and benefits, which makes it an essential tool for business owners or even professional individuals. Given below are the benefits and features of a zero balance account:
- Current accounts have no minimum balance requirement and zero rates of interest.
- They offer an overdraft facility to the account owners for immediate and seasonal requirements of funds without overburdening them with unnecessary interest.
- It provides an unlimited withdrawal limit from the home branch and limited from other branches.
- The facilities of this account can be availed by businesses, NGOs, trusts, private & public companies, proprietors and individuals.
- The account has multiple direct fund transfer facilities such as RTGS, NEFT, demand drafts, free cheque leaves and pay orders.
- Zero balance current accounts offer more liquidity and flexibility to its account holders as there is no minimum account balance to be maintained.
Also Read: Current Account In Banking: Everything You Need To Know
Monthly Average Balance/Minimum Average Balance in Zero Balance Current Account
The monthly average balance or minimum average balance is the number obtained by dividing the sum of the day-end closing balance in an account by the number of days in that month. Unlike any regular savings account, zero balance current accounts have no monthly average balance. A zero balance account is preferred by businesses as it provides all the same facilities as that of a regular current account.
How to Open Zero Balance Current Account Online?
Any professional individual or other eligible entities can open a zero balance current account with a commercial or non-commercial bank. Here are the steps you should follow to open a zero balance current account:
Step 1: Visit the official website of your preferred bank
Step 2: Open the new account opening form.
Step 3: Fill out the details as required in the ‘Personal details’ and ‘Account details’ sections and click on ‘Submit’.
Step 4: Download or take a printout of the completed form.
Step 5: Go to the nearest branch of the chosen bank and submit the form along with requisite KYC documents.
One can also open a zero balance current account offline by visiting the bank branch along with the required documents.
Eligibility for Opening a Zero Balance Current Account
The following entities can open a zero balance current account with a bank primarily for business transaction purposes:
- Sole proprietor of a business/company
- Professional individual
- Partnership firms
- Private and public companies
- NGOs & trusts
- Hindu Undivided Family
Documents Required to Open Zero Balance Current Account
To open a zero balance current account, the entity has to submit the following documents to the bank:
- Proof of address (Voter ID, rent agreement, water or electricity bill, passport, driving license, etc.)
- Proof of identity (Aadhaar ID, PAN ID, passport, driving license, etc.)
- For sole proprietor – Letter of Proprietorship, Certificate by Sales Tax or Service Tax Authority)
- For partnership firms- Partnership deed
- For private or public limited company- Memorandum & Article of Association, Certificate of Incorporation
- For Hindu Undivided Family- duly signed letter of HUF
- For trusts- Certificate of Registration, Trust Deed & Resolution by Trustees and Board
Things to Keep in Mind before Opening a Zero Balance Current Account
Here are a few things you should keep in mind before opening a zero balance current account:
- Know about all the core services which your bank provides, such as mobile banking, internet banking, multi-location cash deposit & transfer, bill payment services, IT and ERP services and wire transfer.
- Be aware of the details of the overdraft facility and its maximum limit.
- Be mindful of the cost or service charges associated with the premium services which your bank provides.
Also Read: 5 Major Differences Between Savings Account And Current Account
Final Word
The benefits and attributes of a zero balance current account make it ideal for all businesses and companies who wish to engage in hassle-free transactions. However, one should be mindful of the features offered by a zero balance current account before opting for one.
FAQs on Zero Balance Current Account
Ans: MSMEs benefit from the feature of liquidity of a zero balance current account. They can use the fund for business purposes and expansions without worrying about keeping a minimum balance in their accounts.
Ans: No, it is not mandatory for MSMEs to provide a GST number while opening a zero balance current account.
Ans: Here are the different types of current accounts banks offer:
Standard Current Account
Premium Current Account
Packaged Current Account
Single Column Cash Book
Foreign Currency Account
Ans: Given below is a list of some of the top banks you can opt for opening a zero balance current account:
Axis Bank
Bank of Baroda
ICICI Bank
HDFC Bank
IndusInd Bank
Ans: Yes, you can, but your bank will automatically charge your zero balance account as a regular savings account after you exceed the maximum withdrawal limit set by your respective bank. Additionally, you will also have to maintain an average monthly balance.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
