Step-by-Step Guide
5 Steps
How to Open a Current Account for Your New Company
Step by step guide on how to open a current account for a newly incorporated Private Limited Company, LLP, or OPC in India. Covers required documents, best banks for startups, and tips for choosing the right business banking partner.
Quick Overview
Estimated Cost
₹0
Time Required
2 to 5 Working Days
Total Steps
5 Steps
What You'll Need
Documents Required
- Certificate of Incorporation (COI) issued by the Registrar of Companies
- Memorandum of Association (MOA) and Articles of Association (AOA) for companies, or LLP Agreement for LLPs
- Company PAN Card allotted during incorporation
- Board Resolution authorizing the opening of the bank account and designating authorized signatories
- KYC documents of all directors or designated partners (PAN Card, Aadhaar Card, passport-size photographs)
- Proof of registered office address (rent agreement or ownership deed with utility bill)
- Identity and address proof of all authorized signatories
- GST Registration Certificate (if applicable)
- Udyam Registration Certificate (if registered as MSME)
Tools & Prerequisites
- Completed company or LLP incorporation with all certificates received from MCA
- Registered office address with valid address proof documentation
- Valid email address and mobile numbers of all directors and authorized signatories
- Access to the bank's branch or online account opening portal
- Company rubber stamp or common seal (optional but recommended for banking transactions)
Opening a business current account is one of the first and most important tasks after incorporating your company or LLP in India. Without a bank account in your company's name, you cannot deposit paid-up share capital, receive payments from clients, pay vendors, file tax returns, or apply for GST registration. This guide walks you through the complete process of opening a current account for your newly incorporated business, from choosing the right bank to activating digital banking features.
The process is straightforward but requires specific documents and a few decisions that can impact your business banking experience for years. With the right preparation, you can have your company current account operational within 2 to 5 working days after incorporation.
Why Your Company Needs a Current Account
A current account is specifically designed for business transactions. Unlike a savings account, it supports high-frequency deposits and withdrawals, has no cap on daily transactions, and is accepted as the standard business banking instrument by all government agencies, vendors, and clients.
Legal and Practical Reasons
- Separate legal entity requirement: A Private Limited Company, LLP, or OPC is a separate legal entity from its founders. All financial transactions must be conducted through a bank account in the entity's name
- Paid-up capital deposit: The share capital committed by subscribers during incorporation must be deposited into the company's bank account. This reflects on the balance sheet and is verified during statutory audits
- GST registration: The GST registration application requires bank account details. While you have a 45-day window after registration to add bank details, having the account ready beforehand speeds up the process (see our GST registration guide)
- Tax compliance: Income tax returns, TDS payments, advance tax payments, and GST payments must be made from the company's bank account
- Investor and client credibility: Professional clients, investors, and government agencies expect to transact with a business through a company bank account, not a personal one
- Audit trail: A dedicated business account creates a clear financial trail for statutory audits, income tax assessments, and investor due diligence
Routing business transactions through personal bank accounts is one of the most damaging mistakes a new company can make. It violates the separation between personal and business finances, can result in the corporate veil being pierced (making directors personally liable for company debts), creates tax complications, and immediately raises red flags during audits and investor due diligence. Always maintain strict separation between personal and company finances.
Documents Required for Opening a Company Current Account
Banks require a standard set of documents to open a current account for a company, LLP, or other business entity. Having these ready before your bank visit will prevent delays.
For Private Limited Companies and OPCs
- Certificate of Incorporation (COI) issued by the Registrar of Companies
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Company PAN Card (automatically allotted during SPICe+ incorporation)
- Board Resolution authorizing the opening of the current account and naming authorized signatories
- KYC documents of all directors: PAN Card, Aadhaar Card, and recent passport-size photographs
- Proof of registered office address: Rent agreement or sale deed plus a recent utility bill (electricity, water, or gas)
- Specimen signature sheet of all authorized signatories (usually provided by the bank)
For Limited Liability Partnerships (LLPs)
- LLP Certificate of Incorporation from MCA
- LLP Agreement filed in Form 3 (must be filed within 30 days of incorporation)
- LLP PAN Card
- Consent letter from designated partners authorizing account opening and naming signatories
- KYC documents of all designated partners: PAN Card, Aadhaar Card, and photographs
- Proof of registered office address
For Partnership Firms and Sole Proprietorships
- Partnership Deed (for partnerships, refer our partnership deed drafting guide)
- PAN Card of the firm (for partnership) or individual (for proprietorship)
- Business registration proof: GST certificate, Udyam certificate, or Shop and Establishment License
- KYC documents of all partners or the proprietor
- Proof of business address
Banks typically accept self-attested photocopies of documents. However, keeping a few sets of copies certified by a Company Secretary or a Notary Public is useful as some banks may request certified copies. You can also keep scanned copies ready for banks that accept digital submissions.
How to Draft the Board Resolution for Bank Account Opening
The Board Resolution is one of the most important documents for opening a company current account. It formally authorizes the company to open the account and designates who can operate it.
Key Elements the Resolution Must Include
- Date and venue of the board meeting
- Names of directors present
- Name of the bank and branch where the account is to be opened
- Type of account (current account)
- Names and designations of authorized signatories
- Signing authority rules (single signatory, joint signatory, or single up to a limit and joint above)
- Authorization for internet banking, mobile banking, and other digital banking services
- Name of the director authorized to execute the account opening documents
The first board meeting of a newly incorporated company must be held within 30 days of incorporation as per Section 173(1) of the Companies Act 2013. Use this meeting to pass the resolution for bank account opening along with other essential resolutions such as appointing the first auditor and allotting shares.
How to Choose the Right Bank for Your Company
The bank you choose will be your primary financial partner, so take time to evaluate options based on factors that matter for your specific business type and needs.
Key Factors to Compare
| Factor | What to Look For | Why It Matters |
|---|---|---|
| Minimum Balance | Zero-balance or low-balance options for startups | Reduces upfront costs when cash flow is limited |
| Free Transaction Limit | At least 100 free transactions per month | Avoids additional charges as transaction volume grows |
| Digital Banking | Robust mobile app, net banking, and real-time notifications | Enables efficient day-to-day financial management |
| API Integration | Banking APIs for payment automation and reconciliation | Critical for tech companies and SaaS businesses |
| Payment Gateway Support | Compatibility with Razorpay, Cashfree, PayU | Essential for e-commerce and online businesses |
| International Capabilities | SWIFT transfers, forex support, FEMA compliance | Important for export businesses and IT service providers |
| Lending Products | Business loans, overdraft, CC facility availability | Easier loan access from a bank where you maintain your primary account |
| Customer Support | Dedicated relationship manager for business accounts | Faster resolution of banking issues |
Best Banks for Startup Current Accounts in India (2026)
| Bank / Platform | Key Features | Best For |
|---|---|---|
| HDFC Bank SmartUp | Low AMB, startup advisory, fintech partnerships | Funded startups, growing businesses |
| ICICI Bank iStartup | Customized packages, digital-first approach | Tech startups, D2C brands |
| Kotak 811 Business | Zero-balance digital account, easy onboarding | Bootstrapped startups, freelancers |
| RazorpayX | Built-in payroll, vendor payouts, accounting integration | SaaS companies, online businesses |
| Open (Neo-Bank) | Automated bookkeeping, expense management, invoicing | Small businesses wanting all-in-one banking |
| HSBC Business | Global banking network, strong forex capabilities | Export businesses, international trade |
Visit or call at least 3 banks before deciding. Ask specifically about startup-friendly features, fee waivers for the first year, integration capabilities with your accounting software, and the process for getting a business credit card or overdraft facility in the future. Many banks offer special packages for newly incorporated companies that include waived minimum balance requirements for the first 6 to 12 months.
Step by Step Process to Open a Company Current Account
Step 1: Prepare All Documents
Collect the Certificate of Incorporation, MOA/AOA or LLP Agreement, company PAN card, Board Resolution, and KYC documents of all directors. Make 2 to 3 sets of photocopies and self-attest them. Keep the originals ready for verification at the bank branch.
Step 2: Visit the Bank Branch or Initiate Online
Visit the chosen bank branch with all documents and the authorized director named in the Board Resolution. Some banks allow you to initiate the process online and upload documents digitally before the branch visit. Ask the branch manager for the business current account opening form and fill it with company details, director details, and account operation instructions.
Step 3: Submit the Application and Complete KYC
Submit the completed form along with all supporting documents. The bank will verify each director's identity against their PAN and Aadhaar. For companies with more than 2 directors, the bank may require all directors to visit the branch or complete Video KYC individually. Some banks may schedule a physical verification visit to your registered office address.
Step 4: Account Activation and Initial Deposit
After document verification (typically 2 to 5 working days), the bank activates your account and provides:
- Account number and IFSC code
- Cheque book (first book usually free)
- Business debit card linked to the account
- Net banking credentials (user ID and initial password)
- Mobile banking registration details
Deposit the paid-up share capital into the account immediately. This can be done through NEFT transfer from the directors' personal accounts, cash deposit (with appropriate documentation), or demand draft.
Step 5: Set Up Digital Banking and Integrations
After activation, set up the following immediately:
- Activate net banking and set transaction limits appropriate for your business
- Register for mobile banking on all authorized signatories' phones
- Set up email and SMS alerts for every transaction to monitor account activity
- Link the account with your accounting software (Zoho Books, Tally, QuickBooks) for automated bank feeds
- Apply for a payment gateway if you accept online payments
- Register the account for UPI payments through the bank's business app
With your current account operational, you can now deposit share capital, apply for GST registration, receive client payments, pay vendors and employees, file tax returns, and conduct all business financial transactions through a proper, auditable channel.
What to Do After Opening the Current Account
Opening the account is just the beginning. Here are the essential next steps to set up your company finances properly.
Deposit Paid-Up Share Capital
Transfer the committed paid-up capital from each shareholder's personal account to the company account. Each transfer should clearly reference the shareholder's name and the number of shares being paid for. Keep bank statements showing these deposits as they will be needed during the first statutory audit.
Update Bank Details on Government Portals
- Add the bank account on the GST portal during or after GST registration
- Update bank details on the Income Tax portal for processing any refunds
- Register the account on EPFO and ESIC portals if you plan to hire employees (see PF registration and ESI registration)
- Link the account on the TDS portal for tax deduction compliance
Set Up Accounting and Compliance Systems
- Hire a Chartered Accountant or use accounting services to set up your books of accounts from day one
- Configure your accounting software to categorize income, expenses, and tax payments automatically
- Establish a monthly bank reconciliation process to ensure your books match the bank statements
- Set up recurring payment instructions for rent, subscriptions, and statutory payments
Common Mistakes to Avoid When Opening a Business Bank Account
- Choosing a bank solely on minimum balance: A zero-balance account with poor digital banking, limited transaction limits, and no API support can cost you more in inefficiency than paying a slightly higher minimum balance at a better-equipped bank
- Not passing a proper Board Resolution: An improperly drafted or unsigned resolution will be rejected by the bank. Get your CA or CS to draft it or use the bank's prescribed format
- Delaying the account opening: Every day without a bank account is a day you cannot deposit capital, accept client payments, or complete essential registrations like GST
- Ignoring digital banking features: In 2026, most business banking happens online. Prioritize banks with strong digital capabilities over those with only a convenient branch location
- Not reading the fee schedule: Banks charge for dozens of small services that add up. Read the complete tariff sheet before signing the account opening form and negotiate waivers where possible
- Mixing personal and business transactions: Never deposit personal funds into or withdraw company funds for personal use without proper documentation (salary, dividends, or documented loans)
- Not linking the account to accounting software: Manual data entry from bank statements wastes hours every month and introduces errors that are caught only during audits
Banking for Different Types of Businesses
E-Commerce and Online Businesses
If you run an e-commerce business or accept online payments, prioritize a bank that integrates smoothly with payment gateways like Razorpay, Cashfree, or PayU. Look for banks offering faster settlement cycles (T+1 instead of T+2 or T+3) as this directly impacts your cash flow. Set up separate virtual account numbers to track payments from different marketplace channels like Amazon, Flipkart, and your own website.
Export and IT Service Companies
For businesses receiving payments from international clients, choose a bank with a strong forex desk and competitive exchange rates. You will need capabilities for inward SWIFT transfers, FIRC generation, and FEMA compliance. Banks like HDFC, ICICI, HSBC, and DBS are known for efficient international payment processing. Ensure your bank can handle foreign currency accounts if needed. An Import Export Code and proper documentation is also important for export businesses.
Manufacturing and Trading Businesses
Manufacturing and trading companies should look for banks offering cash credit (CC) and overdraft (OD) facilities, as working capital requirements are typically higher. Banks with extensive branch networks are advantageous for cash-intensive businesses. Check for trade finance products like Letters of Credit, Bank Guarantees, and Bill Discounting if you deal with large orders or government contracts.
Professional Service Firms
Law firms, CA firms, consulting agencies, and other professional service firms typically have lower transaction volumes but need reliable invoicing and payment tracking. Choose a bank that integrates with your billing software and offers automatic payment reminders. If you operate as an LLP, ensure the bank handles LLP accounts smoothly, as some smaller banks may have limited experience with LLP documentation.
Understanding Current Account Charges and Fees
Bank charges for business current accounts can vary significantly. Understanding the fee structure helps you budget accurately and avoid unexpected costs.
| Service | Typical Charge Range | Notes |
|---|---|---|
| Account opening fee | 0 to 1,000 rupees | Most banks do not charge an opening fee |
| Minimum balance non-maintenance | 200 to 1,000 rupees per quarter | Charged if balance drops below the required AMB |
| NEFT/RTGS/IMPS (online) | Free to 10 rupees per transaction | Most banks offer free online transfers |
| Cash deposit (beyond free limit) | 0.05 to 0.1 percent of amount | Free limit typically 2 to 5 lakh per month |
| Cash withdrawal (beyond free limit) | 0.05 to 0.1 percent of amount | Free limit typically 1 to 3 lakh per month |
| Cheque book (after first free book) | 2 to 5 rupees per leaf | First cheque book of 25 to 50 leaves usually free |
| Debit card annual fee | 200 to 500 rupees | Often waived for the first year |
| Account statement (physical) | 50 to 200 rupees per statement | Digital statements typically free |
Conclusion
Opening a current account for your newly incorporated company is a foundational step that enables all business financial operations. The process takes 2 to 5 working days with complete documentation and involves choosing the right bank, preparing your Board Resolution and company documents, completing KYC verification, and depositing your initial share capital.
Choose a bank that aligns with your business model. Tech startups benefit from digital-first banks with API integrations, exporters need strong forex capabilities, and manufacturing businesses need working capital-friendly banks with trade finance products. Start with a basic account and upgrade as your business grows.
If you need help with any post-incorporation tasks including opening a bank account, registering for GST, or setting up your compliance systems, our team at IncorpX can guide you through every step.
Frequently Asked Questions
Is it mandatory to open a current account after company incorporation?
While there is no specific legal provision that mandates opening a current account within a fixed number of days, it is practically essential for several reasons. The paid-up capital committed during incorporation must be deposited into a company bank account. You cannot issue or receive payments, sign commercial contracts, or pay employee salaries without a business bank account. The Registrar of Companies and tax authorities expect to see a functional company bank account during audits and compliance reviews. Most businesses open a current account within 7 to 15 days of receiving the Certificate of Incorporation.
What is the difference between a current account and a savings account for a business?
A current account is designed for businesses and allows unlimited transactions without any cap on the number of deposits or withdrawals. It does not earn interest on the balance. A savings account is designed for individuals, earns interest, but has limits on the number of transactions. Companies, LLPs, and partnership firms cannot open savings accounts as per RBI guidelines. Only sole proprietors may use a savings account for small-scale business, though a current account is recommended even for proprietorships to maintain clear separation between personal and business finances.
What documents are required to open a current account for a Private Limited Company?
To open a current account for a Private Limited Company, you need the Certificate of Incorporation, Memorandum of Association (MOA), Articles of Association (AOA), Company PAN Card, a Board Resolution authorizing the account opening and naming authorized signatories, PAN Card and Aadhaar Card of all directors, passport-size photographs of all directors and signatories, proof of registered office address (rent agreement or ownership deed plus a recent utility bill), and optionally, the GST Registration Certificate and Udyam MSME Certificate.
What documents are needed to open a current account for an LLP?
For an LLP current account, you need the Certificate of Incorporation issued by MCA, the LLP Agreement (filed in Form 3 within 30 days of incorporation), LLP PAN Card, a consent letter or resolution from designated partners authorizing account opening and naming signatories, PAN Card, Aadhaar Card, and photographs of all designated partners, and proof of registered office address. Some banks may also ask for the DPIN allotment letter for designated partners.
Can I open a company current account online without visiting a bank branch?
While a few banks and fintech platforms like RazorpayX, Open, and Jupiter Business now offer end-to-end online onboarding for business current accounts, most traditional banks in India still require at least one branch visit for in-person verification (IPV) of directors and submission of original documents. Some banks like HDFC, ICICI, and Kotak allow you to initiate the process online and upload documents digitally, but require a final branch visit or a video KYC session to activate the account. Fully digital account opening is becoming increasingly common and may be the norm by late 2026.
What is the minimum balance required for a company current account?
Minimum balance requirements vary significantly across banks. Some banks offer zero-balance or low-balance startup accounts specifically designed for newly incorporated companies. Traditional current accounts typically require a minimum Average Monthly Balance (AMB) of 10,000 to 25,000 rupees, while premium accounts may need 50,000 to 1 lakh rupees or more. Non-maintenance of minimum balance attracts charges of 200 to 1,000 rupees per quarter. Ask about the minimum balance requirement before opening the account and choose one that aligns with your expected cash flow in the initial months.
Which bank is best for opening a startup company current account in India?
The best bank depends on your specific business needs. HDFC Bank SmartUp offers dedicated startup banking with low balance requirements and integration with fintech tools. ICICI Bank iStartup provides customized startup packages with free digital banking. Kotak Mahindra 811 Business offers zero-balance digital accounts. RazorpayX provides automated payroll, vendor payouts, and seamless payment gateway integration. Open offers neo-banking with built-in accounting and expense management. For international transactions, HSBC and DBS offer strong forex capabilities. Compare based on transaction limits, digital features, API support, charges, and customer service quality.
How long does it take to open a company current account?
The account opening process typically takes 2 to 5 working days from submission of complete documents. If the bank requires additional verification such as a visit to your registered office, it may take up to 7 working days. Online-first banks and fintech platforms may activate accounts within 24 to 48 hours. Common reasons for delays include incomplete documentation, mismatch between the address on the documents and the actual premises, or the bank needing additional KYC verification for directors who are foreign nationals or NRIs.
Can I open a current account before getting a PAN card for the company?
No, you need the company PAN card to open a current account. However, since PAN is automatically allotted during company incorporation through the SPICe+ form, you will have the PAN by the time you receive your Certificate of Incorporation. The PAN number appears on the COI itself, and a physical PAN card is generated and dispatched separately. Most banks accept the PAN number printed on the COI for account opening and do not insist on the physical PAN card.
Can the same person be the sole authorized signatory for a company bank account?
Yes, if the board resolution designates a single person as the authorized signatory, that person can solely operate the account. However, for financial control and governance, it is recommended to have at least two authorized signatories with a signing arrangement that requires both signatures for transactions above a certain amount (for example, single signatory for up to 50,000 rupees and dual signatories for higher amounts). This reduces the risk of unauthorized transactions and is considered a best practice by auditors and investors.
What is a Board Resolution for bank account opening and how do I draft it?
A Board Resolution is a formal decision passed at a board meeting of the company authorizing specific actions. For bank account opening, the resolution should state the name of the bank and branch, the type of account (current account), the names and designations of authorized signatories, the signing authority (single or joint), and any transaction limits. The resolution must be signed by all directors present at the meeting and certified as a true copy by the Company Secretary or a director. Most banks provide a standard format for the board resolution, or your CA or CS can draft one for you.
Can I open multiple current accounts for the same company?
Yes, a company can open multiple current accounts across different banks. This is common for businesses that need dedicated accounts for different purposes such as one for operations, one for payroll, one for receiving payments from a specific client or project, and one for international transactions. There is no legal limit on the number of current accounts a company can hold. However, maintaining too many accounts can complicate bookkeeping and reconciliation. Keep the number manageable and ensure each account serves a clear purpose.
What are the charges associated with a company current account?
Common charges include account maintenance fees (0 to 500 rupees per quarter), minimum balance non-maintenance charges (200 to 1,000 rupees per quarter), cheque book charges (first cheque book usually free, subsequent books at 2 to 5 rupees per leaf), NEFT/RTGS transaction fees (often free for online transactions, 2 to 25 rupees for branch transactions), cash deposit charges beyond the free limit (0.05 to 0.1 percent of amount), debit card annual fee (200 to 500 rupees), and statement generation charges for physical statements. Compare these charges across banks, as they can add up significantly over a year.
Should I deposit the entire paid-up capital into the current account immediately?
Yes, the paid-up share capital should be deposited into the company current account as soon as it is opened. During the incorporation process, subscribers commit to paying for a certain number of shares. This money should be deposited into the company account preferably within the first month of incorporation. The paid-up capital reflects on the company's balance sheet and must be supported by bank statements during statutory audits. Failure to deposit the stated paid-up capital can raise queries during annual compliance audits and investor due diligence.
What happens if I do not open a bank account after incorporation?
While there is no specific penalty from MCA for not opening a bank account, operating without one creates several practical and legal problems. You cannot deposit the paid-up share capital as required by your incorporation documents. You cannot apply for GST registration which requires bank account details. You cannot file income tax returns properly without a business bank account. Any business transactions conducted through personal accounts can pierce the corporate veil, potentially making directors personally liable for company debts. For GST registration specifically, the portal now allows you to add bank details within 45 days of registration, but having the account ready before applying is recommended.
Can a sole proprietor open a current account in the business name?
Yes, a sole proprietor can open a current account in their trade name or business name. Banks typically require the proprietor's PAN card, Aadhaar card, address proof, a proof of business such as GST Registration Certificate, Udyam Registration Certificate, or Shop and Establishment License, and proof of the business address. Some banks may also accept an FSSAI license, IEC code, or any other government-issued registration as proof of business. The current account for a proprietorship is linked to the individual's PAN since proprietorships do not have a separate PAN.
What is the difference between a current account and a cash credit account?
A current account is a basic transaction account where you deposit and withdraw your own funds with no borrowing facility. A cash credit (CC) account is a working capital loan facility where the bank provides a credit limit based on your business collateral (usually stock or receivables), and you can withdraw funds up to that limit. Interest is charged only on the amount utilized, not the entire limit. New companies typically start with a current account and apply for a cash credit facility after 6 to 12 months of operations when they have financial statements and business history to support a loan application.
How do I link my company current account with accounting software?
Most major accounting platforms in India offer bank feed integration that automatically imports transactions from your current account. In Zoho Books, go to Banking, click Add Bank Account, and connect through Yodlee aggregation or upload bank statements. In Tally Prime, use the banking feature to import statements in CSV or OFX format. QuickBooks supports direct bank connection through its banking feeds feature. Some banks like ICICI and HDFC offer API-level integration for real-time transaction sync. Setting up this connection early saves hours of manual data entry and reduces errors in your books.
Can NRIs or foreign nationals be authorized signatories on a company current account?
Yes, NRIs and foreign nationals who are directors of an Indian company can be authorized signatories on the company current account. However, banks typically require additional documentation including a valid passport, overseas address proof, and sometimes a stamp or apostille on the Board Resolution. Some banks may ask for a Power of Attorney in favour of a resident Indian if the NRI director is not physically present. It is advisable to have at least one resident Indian director as an authorized signatory to handle day-to-day banking operations without delays.
What is a payment gateway and do I need one with my current account?
A payment gateway is a service that processes online payments from customers through credit cards, debit cards, UPI, net banking, and wallets. If your business sells products or services online or accepts digital payments, you need a payment gateway linked to your current account. Popular options in India include Razorpay, Cashfree Payments, PayU, CCAvenue, and Instamojo. When choosing a bank, check its compatibility with your preferred payment gateway. Settlement times (the time it takes for payment gateway collections to reach your bank account) typically range from T+1 to T+3 days and can impact your cash flow.
How do I set up UPI payments for my company current account?
UPI (Unified Payments Interface) can be set up for your company current account by downloading the bank's business mobile banking app. Register the company mobile number linked to the account on the UPI module and create a VPA (Virtual Payment Address) in the format companyname@bankname. You can also use business UPI solutions from Razorpay, PayTM for Business, or PhonePe Business for accepting UPI payments with a QR code. UPI transactions are free for most categories, making it an excellent option for small businesses to accept payments from customers and vendors.
What is the RBI guideline on opening current accounts for companies?
The RBI issued a circular in August 2020 that restricts banks from opening current accounts in certain situations. If your company has availed a cash credit (CC) or overdraft (OD) facility from a bank, all current account operations should ideally be routed through that lending bank. Other banks can open current accounts only with a No Objection Certificate (NOC) from the lending bank. For newly incorporated companies with no borrowings, this restriction does not apply and you can freely open a current account at any bank of your choice. Once you avail a loan, discuss the current account implications with your lending bank.
Should I open the current account at the same bank where I plan to get a loan?
It can be strategically beneficial to open your current account at a bank you may approach for business loans in the future. Banks prefer to lend to businesses that maintain their primary operational account with them, as they can see your cash flow patterns, transaction volumes, and business activity firsthand. This transaction history often leads to faster loan approvals, better interest rates, and higher credit limits. Additionally, having your current account and loan at the same bank simplifies operations as per RBI's current account guidelines.
What banking features should a tech startup prioritize when choosing a bank?
Tech startups should prioritize banks offering API banking and developer tools for integrating banking into their products. Look for banks with robust payment gateway compatibility, automated payroll disbursement, vendor bulk payment capabilities, and virtual account numbers for tracking payments from different clients. Real-time webhook notifications for incoming and outgoing payments, UPI Autopay for subscription businesses, and international wire transfer capabilities for receiving foreign client payments are also important. Digital-first banks like RazorpayX, Open, and ICICI iStartup typically offer better tech integration than traditional banks.
Can I open a current account with a neo-bank or fintech company?
Neo-banks and fintech companies in India like RazorpayX, Open, Jupiter Business, NiYO, and Tide do not hold banking licenses themselves. They partner with RBI-licensed banks and offer current accounts through these partner banks with an enhanced digital experience. The underlying account is legally held at the partner bank (for example, RBL Bank, ICICI Bank, or Yes Bank). This means your deposits are protected under the DICGC insurance up to 5 lakh rupees per depositor per bank. Neo-bank accounts offer faster onboarding, better UX, and built-in tools for invoicing, payroll, and expense management.
How do I add more directors or change authorized signatories on the company account?
To add or change authorized signatories, you need to pass a new Board Resolution at a duly convened board meeting. The resolution should clearly state the changes being made, including the names and specimen signatures of the new signatories. Submit the new resolution along with KYC documents of the incoming signatory and a request letter signed by an existing authorized signatory to the bank. If a director has been added or removed from the company, submit the updated master data from MCA or the relevant ROC filing acknowledgement as supporting proof.
What is the importance of maintaining books of accounts linked to the current account?
Every company and LLP in India is legally required to maintain proper books of accounts under Section 128 of the Companies Act 2013 and the LLP Act 2008. Your current account is the primary source of financial data for these books. All business income, expenses, capital infusions, and payments must be routed through the company current account. The bank statement serves as third-party evidence during statutory audits, annual compliance, and income tax assessments. Co-mingling personal and business funds by using personal accounts for company transactions can lead to piercing of the corporate veil, making directors personally liable.
Do I need separate bank accounts for GST and TDS payments?
No, you do not need separate bank accounts for GST and TDS. All tax payments including GST, TDS, advance tax, and income tax can be made from your single company current account. The payments are made through the respective government portals (gst.gov.in for GST, incometax.gov.in for TDS and income tax) by generating challans and making online payments through net banking. The bank debits the amount from your current account. Having a single well-maintained current account actually simplifies tax compliance as all payments and receipts are tracked in one place.
What is a certificate of initial deposit and why does the bank need it?
Some banks may ask for a certificate from the company confirming the initial share capital deposit. This is to verify that the company is depositing genuine paid-up capital and not funds from unrelated sources. The certificate is typically a letter on company letterhead signed by a director confirming the amount being deposited as paid-up share capital, along with the names and contribution amounts of each subscriber to the MOA. This is more common with traditional banks and helps them meet their KYC and anti-money laundering compliance requirements.
How do I receive international payments in my company current account?
To receive international payments, your current account must be enabled for inward foreign remittances. Share your account details along with the bank's SWIFT code with your overseas clients. For receiving payments from freelancing platforms or foreign companies, you may also need an Import Export Code (IEC) depending on the nature of the transaction. The bank will convert the foreign currency to INR at the prevailing exchange rate. Some banks charge a foreign transaction fee of 0.1 to 0.5 percent. You will also need to complete FEMA compliance for inward remittances, including a Purpose Code declaration and a FIRC (Foreign Inward Remittance Certificate).
Can I close my company current account and open one at another bank?
Yes, you can close your current account and move to another bank at any time. Pass a Board Resolution authorizing the closure of the existing account and opening of a new account. Submit a closure request at the existing bank along with the unused cheque leaves and debit card. Most banks complete the closure within 7 working days and transfer the remaining balance to your new account. Before closing, update your account details on the GST portal, income tax filing system, payment gateways, vendor contracts, and all other systems where the old account details are registered.
What is the ideal time to open a company current account after incorporation?
The ideal time is within 7 to 10 days of receiving the Certificate of Incorporation. This allows you to deposit the paid-up capital promptly, begin business operations, apply for GST registration (which requires bank account details), and set up vendor and client payment systems. Delaying beyond 30 days can create complications with the first statutory audit, as the auditor will expect to see the paid-up capital reflected in the bank account from the early days of incorporation.
How do I choose between a basic current account and a premium current account?
Choose based on your expected monthly transaction volume and banking needs. A basic current account typically offers lower minimum balance (5,000 to 10,000 rupees), limited free transactions (50 to 100 per month), basic net banking, and a single debit card. A premium account requires higher minimum balance (25,000 to 1 lakh rupees) but provides unlimited free transactions, multiple debit cards, higher cash deposit limits, dedicated relationship manager, priority customer support, and enhanced credit card and loan options. Startups in the early stage should start with a basic account and upgrade as transaction volumes increase.
Is a common seal still required for opening a company bank account?
The Companies Amendment Act 2015 made the common seal optional for companies. Most banks no longer require a common seal for opening a current account or for regular banking transactions. However, some traditional banks may still ask for it as part of their internal processes. If the bank requests a common seal, you can get one made for approximately 500 to 1,500 rupees from a local stamp or rubber stamp maker. The seal typically includes the company name, CIN, and the state of registration.
What is DICGC insurance and does it cover my company current account?
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures all bank deposits, including current account balances, up to 5 lakh rupees per depositor per bank. This means if the bank faces financial difficulties or is placed under moratorium, your deposit up to 5 lakh rupees is protected and will be returned. If your company maintains a large balance in a single bank, consider spreading deposits across multiple banks to maximize DICGC coverage. Note that accounts at different branches of the same bank are treated as one deposit for insurance purposes.
Can I use my company current account for personal expenses?
No, you should never use your company current account for personal expenses. The company is a separate legal entity, and its bank account must be used exclusively for business transactions. Using company funds for personal expenses violates the Companies Act 2013, can be treated as a deemed dividend under Section 2(22)(e) of the Income Tax Act, and may lead to piercing of the corporate veil, making directors personally liable for company debts. If you need to draw money from the company, do so through proper channels like salary, director's remuneration (approved at AGM), dividends, or documented loans.
What banking records should I maintain for annual compliance and audit?
For smooth annual compliance and audit, maintain the following banking records: monthly bank statements for the entire financial year, bank reconciliation statements prepared monthly, records of all cheques issued and received, documentation of all loan and overdraft transactions, copies of fixed deposit receipts, foreign remittance certificates (FIRC) for international transactions, and bank interest certificates for TDS deducted by the bank. Your statutory auditor will independently verify the bank balance by sending a confirmation letter directly to the bank, so ensure your books and bank statements always match.
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