ASSIGNMENT

OF

FINANCIAL MANAGEMENT

ON
CURRENT ACCOUNT

SUBMITTED TO: SUBMITTED BY:

Lect. Parneet Kaur Mandeep Kumar

Roll No 5789

MBA-I (A)

SCHOOL OF MANAGEMENT STUDIES

PUNJABI UNIVERSITY PATALA
Current Account

Current Account is one of the most basic and flexible deposit options for all the
business needs. These cheque operated accounts are primarily meant for
businessmen, firms, companies, and public enterprises etc that need banking
facility more frequently. Unlike savings bank account, no limits are fixed by
banks on the number of transactions permitted in the Account.

Most of the banks usually insist for a higher minimum balance as compared to
savings account to be maintained in Current account. Now Current accounts are
available with debit card and online banking facilities which make the
transactions easier. Certain service charges are also imposed for operating
current account. However these accounts cannot be considered as a saving
account since the banks are not allowed to pay any interest to current account
balance. In case of death of the account holder his legal heirs are paid interest at
the rates applicable to Savings bank deposit from the date of death till the date
of settlement.

Current account is a financial account with a bank or a financial institution. It

enables account holders to make or receive an unlimited number of payments as
frequently as they wish. Thus, current accounts are considered as an essential
tool for businessmen.

Current Account is primarily meant for businessmen, firms, companies, and

public enterprises etc. that have numerous daily banking transactions. Current
Accounts are cheque operated accounts meant neither for the purpose of earning
interest nor for the purpose of savings but only for convenience of business
hence they are non-interest bearing accounts. In a Current Account, a customer
can deposit any amount of money any number of times. He can also withdraw
any amount as many times as he wants, as long as he has funds to his credit.
Generally, a higher minimum balance as compared to Savings Account is
required to be maintained in Current account.

As per RBI directive banks are not allowed to pay any interest on the balances
maintained in Current accounts. However, in case of death of the account holder
his legal heirs are paid interest at the rates applicable to Savings bank deposit
from the date of death till the date of settlement. Because of the large number of
transactions in the account and volatile nature of balances maintained, banks
usually levy certain service charges for operating a Current account.

How current account can be opened?

Opening a Current Account will vary depending up on the bank type.

Current Account can be opened in the name of an individual or in
joint names of the depositors by filling up the appropriate forms.
Normally the applicant has to visit the bank himself for opening a
new account. Most of the procedures are same as opening a saving
account.

Current Account can be opened by:

1. An individual
2. Two or more individuals
3. Sole proprietorship concerns.
4. Partnership concerns.
5. Hindu Undivided Family (HUF).
6. Limited Companies.
 7. Clubs, Societies.

Documents Required for Opening a Current Account

• Any of the address proofs such as Passport, Driving License, Voters ID

etc
• Two passport size photos are required for opening an account.
• PAN Number and Declaration in Form 60 and 61 as per the Income Tax
Act, 1961 is also necessary.
• An existing account holder or a respectable citizen, well known to the
bank should introduce the applicant at the time of opening the account.
• For business accounts, copy of the Business Registration to be submitted
by the account holder.
• Copy of the Memorandum of Association
• Copy of the Article of Association duly certified to be submitted for
opening a current account for company or a firm.
• Opening current account for a society, constitution together with a list of
current office bearers to be submitted

How Current Accounts Work

Employers often transfer wages directly into the current account. Current
accounts provide the facility to make direct payments for bills, rent and
mortgage. There are two ways in which a current account holder can do this:
Standing Order:

If one instructs the bank in which s/he holds a current account to make a
monthly payment of a fixed amount to a particular person, it is known as a
standing order. Account holders can also change the amount by intimating the
financial institution or bank.

Direct Debit:

When customers instruct their banks to pay an amount (that is not fixed) to a
particular person, it is known as a direct debit. The party that has to withdraw
the payment can do so by informing the account holder.

Benefits of Current Account

Holding a current account has the following advantages:

• Interest earnings on balance.

• Overdraft facility is available
• Online management of money
• Check book facility for non-cash payments
• Nomination facility is available under this current account.
• Third party cheque will be collected by the depositor if they are endorsed.
Drawbacks of Current Account

Disadvantages of a current account:

• Fine print and paperwork can be lengthy and perplexing.

• Services of package accounts have additional costs..
• Losing the card can restrict one’s access to cash.
• A limit may be imposed on the amount of funds one can withdraw in a
day.

HDFC CURRENT ACCOUNT

HDFC bank provides various kind of banking solutions. HDFC Current Bank
Account is one such banking service provided by the bank. There are various
kinds of current accounts which are provided by the bank so that the customers
can choose the one that they need. They are briefly discussed below:

• Plus Current Account: HDFC plus Current Bank Account provides the
feature of multicity banking across 550 cities in the country. The average
quarterly balance to be maintained in this bank account is Rs. 1, 00,000. Among
the other features are, free fund transfer among the HDFC bank accounts,
payment and collection through RTGS is free, payment and collection through
NEFT is free, 50 DDs and 50 POs can be issued free of cost every month, free
at-par cheques (300 leaves), 24 hours phone banking, net banking and mobile
banking.
• Trade Current Account: The average quarterly balance to be maintained in
this bank account is Rs. 40,000. Among the other features are, free fund transfer
among the HDFC bank accounts, payment and collection through RTGS is free,
payment and collection through NEFT is free, 30 DDs and 30 POs can be issued
free of cost every month, free at-par cheques (200 leaves), 24 hours phone
banking, net banking and mobile banking.

• Premium Current Account: The average quarterly balance to be maintained

in this bank account is Rs. 25,000. Among the other features are, inter-city fund
transfer among the HDFC bank accounts (up to 25 lacs each month with
incremental charge of Rs. 1.50 for every 1000), payment and collection through
RTGS @ Rs 25 each transaction, payment and collection through NEFT is free,
DDs and Pos up to Rs. 50,000 @ Rs 40 and Rs 25 for amount above Rs 50,000
up to Rs. 100,000, free at-par cheques (100 leaves), 24 hours phone banking, net
banking and mobile banking.

• Regular Current Account: The average quarterly balance to be maintained in

this bank account is Rs. 10,000. Among the other features are, multicity fund
transfer among the HDFC bank accounts, payment and collection through
RTGS @ Rs 25 each transaction, payment and collection through NEFT is free,
DDs and Pos up to Rs. 50,000 @ Rs 40 and Rs 25 for amount above Rs 50,000
up to Rs. 100,000, at-par cheques at minimal charges, 24 hours phone banking,
net banking and mobile banking.

Features & Benefits

Free Account to account funds transfer between HDFC Bank accounts.

Free payment and collection through RTGS.

Free payment and collection using NEFT (through Net banking)

Free up to 50 Demand Drafts per month and can be issued from any HDFC
Bank Branch

Free up to 50 Pay Orders (PO) per month and can be issued from any HDFC
Bank Branch.

Free anywhere collection & payment transactions (clearing) within HDFC Bank
branch network up to Rs.100 lacs per month.

Convenience to withdraw & deposit cash at all our branches

300 "At Par" cheque leaves free per month.

Register for InstaAlert service and receive updates on your account as and
when the select transaction happens - all this without visiting the branch or
ATM!

HDFC Bank offers you Doorstep Banking*, a channel, which is convenient,

secure and hassle-free. Now, you can enjoy the benefits of banking right at your
doorstep. The Bank will arrange to render the services like Cash & Cheque
Pickup and Cash Delivery, through a reputed agency.

Enjoy facilities like 24-hour Phone Banking, Net Banking and Mobile Banking
that helps you check your balance & transaction details, find out the status of
your cheque or stop cheque payment.

Minimum balance in HDFC account

• For regular current account the average quarterly balance required is Rs 5000.
• Rs 5000 for the accounts at urban areas and Rs 2500 for the accounts of semi-
urban areas.

• No average quarterly balance required for a fixed deposit of Rs 50,000.

• Both ATM cum debit cards are allowed to use.
Service Charges if Minimum balance not maintained in Current Accounts:

Current A/c: Rs.50/- once during the month for metro/urban branches when the
average balance falls below minimum level-Rs.25/- for other centres

Charges for Closure of Current Accounts:

Current Account closed within 6 months of opening of the account Rs. 100.00