How Does a Zero Balance Current Account Benefit MSME & SMEs?

Introduction 

A current account is the kind of bank account that allows an individual or a business to conduct a high number of monetary transactions every day. A Current Account can be opened as well as administered by a single individual, a group of people, or a company. 

There is a difference between a Current Account and a Savings Account. Current Accounts do not pay any interest, while Savings Accounts do. And in the Current Account, the minimum account balance must be greater than the Savings Account.

A Current Account is a necessary banking requirement for any business. Nowadays, customers can open a zero-balance current account in India, in some particular banks. To simplify financial operations and provide legitimacy to the firms by allowing monthly unlimited transactions, internet banking, as well as various other services. A zero balance Current Account can be opened online. 

What is a zero balance current account in India?

In India, a zero-balance current account allows the customer to do transactions without any need to maintain an average monthly balance. In comparison, to a traditional bank account, a zero-balance current account is different. Customers with a zero-balance current account are not required to maintain a minimum average balance in the account. This type of account facility is offered by banks to fulfil the demands of customers, business persons, professionals, traders, and others. Through the online facility, customers can open a zero-balance current account in India online while sitting anywhere.

These accounts have many advantages for MSMEs and SMEs. Customers or business persons who require more working capital flexibility, fluctuating cash flows, or longer debit collection time can find a zero-balance current account feasible.

The main motto of the banks in India behind opening zero balance current accounts is to promote financial inclusion. Banks do not get revenue when they provide facilities for these current accounts. 

How a Zero Balance Current Account Benefits MSMEs & SMEs

The main goal of current accounts is to make the day-to-day activities easy for the entrepreneurs as well as for the business people, and that it must conduct seamlessly. Here’s how zero-balance Current Account benefits a company:

• A zero balance current account allows an unrestricted number of transactions.

One of the most significant benefits of opening a zero balance current account online is that it allows you an unrestricted number of transactions. Additionally, the upper limit of the transaction is very high, and therefore, you can transfer huge sums without being concerned about the upper limit. Being an MSME or SME owner, you can easily perform your day-to-day financial operations smoothly.

Delay transactions may cause unnecessary hiccups. Therefore, a zero balance Current Account is a must for running the business operations smoothly. The current Account makes the day-to-day activities easy and efficient. Benefits are also associated with Current Accounts; for instance, online banking without any delays, easy transactions, etc. In the case of MSMEs and SMEs, Current Accounts help to maintain a strong relationship with the customers as well as with the vendors.

• A zero balance current account allows easy distinction between personal assets and company assets and eases business operations.

It is necessary to maintain a current account that helps you track your cash flow and also aids in making a distinction between your company assets and personal assets. It helps plan as well as manage your budgets more efficiently. Moreover, you can also receive a roundup of their spending.
Your current account helps in maintaining clean financial records of your business and organising information for tax deductions.

• A zero balance current account indicates the validity of a company. 

An individual must keep their personal and company assets separate. It may be challenging for someone in business, as you have to write cheques or make online transactions to the vendors, employees, etc. And when the payment is generated from your account, it may seem unprofessional. Having a current account in the name of a company for MSMEs and SMEs gives confidence to the payees that the business person is associated with a legitimate business.

• A zero balance current account gives more profit than a savings account.

Opening a zero balance current account online provides a customer with a lot of extra perks that a savings account usually does not provide. For customers with current accounts, banks offer free demand drafts, RTGS and NEFT transactions, pay orders, as well as other services based on the business. They also allow unlimited withdrawals and deposits for current account holders. 

• Can opt for an SME business loan with zero balance current account

You can get collateral free business loans with banks for which all you need to do is maintain a minimum balance in the account as specified by the particular bank. You can easily apply for an SME business loan online and use the business loan EMI calculator to analyse the business loan interest rates. 

How to open a zero balance current account in India?

• In any non-commercial bank in India, customers can open a zero-balance current account.
• They can choose from a list of top Indian banks where they can open a zero-balance current account.
• Customers must visit a bank branch with all the appropriate KYC documents along with the form of account opening, such as, identity proof, address proof, etc.
• Customers should note that the account versions and document types for zero-balance current accounts are different in each bank.

Conclusion

Having a current account is mandatory for every SME and MSME. They may use this to grow their business in an effective manner. This bank account will enable them to undertake a range of financial transactions on a daily basis. The zero balance current account has no required minimum balance threshold and does not pay any interest on the deposited amount. 

The zero balance current account is ideal for SMEs or MSMEs since they may not be able to deposit the required amount to create a current bank account. SME/MSME may quickly create a business account with Zero Balance Current Account and reap all the benefits of having a proper current account.