How to open a current account for a Private Limited Company?

Private Limited Company is a popular type entity that is governed under the Ministry of Corporate Affairs. A Private Limited Company is a form of business that is privately held business in which are shares of the company are prohibited from being traded publicly. The

Companies Act, 2013 states that a Private Limited Company should have a minimum of 2 members which can go up to 200. A Private Limited Company can be registered in seven working days. When the company gets registered the next step is to a Bank account in the name of the Company. A regular savings account cannot be used by businesses. A current account has to be opened to avoid transaction limits. All the entrepreneurs open their current bank account as soon as they start their business. There is no interest for the current bank accounts unlike the savings accounts, recurring deposits. Here we will look at the procedure to open a current account. Documents required Getting a Current Bank Account for a Private Limited Company is easy in comparison to a Sole proprietor. Here is the list of documents required for opening a Current Bank Account:

Incorporation Certificate
Resolution of the Board of Directors to open the account and the identification of those who have the authority to operate the account.
One Identity proof from the Customer: PAN Card, Passport, Voter Identity Card, Driving License, Aadhar Card.
One Address proof from the Customer: Passport, Voter Identity Card, Driving License, Aadhar Card.
Recent Colour Photograph
Accounting opening cheque from the existing savings/ individual current account

However, the following documents may be required to be presented to the bank:

Memorandum of Associations (MOA) and Articles of Associations (AOA)
Identity proof of all the Directors/ Authorized Signatories
PAN Card of the Directors

With current bank account banks also typically offer debit cards, mobile banking, and net banking facilities. The duration to open a Current Bank account will depend on the type of entity and submission of documents.

What are the benefits of getting a current bank account? Overdraft Facility- Current Bank accounts have easy access to the Overdraft facility. Overdraft is a short-term loan on which the bank may or may not charge the interest. Sole proprietors also use current accounts, as the current accounts help the entrepreneurs to keep their personal and the company finances separate. This is advantageous from the tax point of view. Also as the account is in the name of the company it adds to the company's credibility.

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Frequently Asked Questions

Common questions about Current Account Opening for Private Limited Company.

A current account is a type of bank account specifically designed for businesses and organizations to conduct their financial transactions. Unlike a regular savings account, a current account does not earn interest but offers features such as overdraft facilities and easy access to funds.

Private limited companies need a current account to keep their business finances separate from personal finances. This not only adds credibility to the company but also makes it easier to manage and track financial transactions, which is beneficial from a tax perspective.

To open a current account for a private limited company, the following documents are typically required: Incorporation Certificate, Resolution of the Board of Directors, identity proof and address proof of the authorized signatories, PAN Card of the Directors, Memorandum of Association, and Articles of Association.

The duration to open a current account for a private limited company will depend on the bank's processes and the timely submission of all required documents. Generally, it can take anywhere from a few days to a week or more.

Yes, a private limited company can have more than one current account with different banks if needed. This can be beneficial for managing different business units or projects separately.

The primary benefits of having a current account for a private limited company include access to overdraft facilities, easy separation of personal and business finances, credibility for the company, and better financial management and tracking for tax purposes.

While it is not legally mandated, it is highly recommended for private limited companies to have a current account to maintain financial transparency, separate business and personal finances, and avail of banking facilities specific to businesses.

Most banks offer the option to initiate the process of opening a current account for a private limited company online. However, physical submission of documents and in-person verification may still be required to complete the process.

Current accounts typically do not have transaction limits, but banks may charge certain fees or maintenance charges depending on the account type and the services availed. It is advisable to check with the bank for their specific charges and fee structures.

Yes, the authorized signatories for a current account of a private limited company can be changed by submitting a new Board Resolution to the bank, along with the required documents of the new signatories.