Opening a Business Bank Account in India
Opening a Business Bank Account in India
One of the first step taken by all Entrepreneurs after starting a business is to open a bank account in the name of the business. Having a bank account in the name of the business allows the business to undertake commercial transactions and also serves as a way of establishing a businesses credibility in the marketplace. In this article, we look at the procedures for opening a bank account and the documents required.
Opening a Business Bank / Current Account
Reserve Bank of India’s Know Your Customer Norms (KYC Norms) details the procedures that the bank should follow while the opening of bank accounts. The KYC norms as prescribed by RBI also prevent banks from being used by criminal elements for money laundering or terrorist financing activities and enables the banks to know its customers better. Note that even though the following are the KYC Norms as prescribed by RBI, each bank may uniquely require documents and information as prescribed by the bank’s internal regulations for the opening of an account.
Opening a Bank Account for an Individual
For opening a bank account for an individual, the identity and address of the individual must be established by providing any of the following documents:
Acceptable Identity Proof verifying Legal Name
- PAN card
- Voter’s Identity Card
- Driving License
- Job Card issued by NREGA duly signed by an officer of the State Government
- Letter issued by the Unique Identification Authority of India ( UIDAI) containing details of name, address and Aadhaar number
- Identity card (subject to the bank’s satisfaction)
- Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank
Acceptable Address Proof verifying Address
- Telephone bill
- Bank account statement
- Letter from any recognized public authority
- Electricity bill
- Ration card
- Letter from employer (subject to satisfaction of the bank)
- A rent agreement indicating the address of the customer duly registered with State Government or similar registration authority.
Opening a Bank Account for a Proprietorship
For opening a bank account for a Proprietorship Firm in the name of the business; address and activity of the business must be provided. In addition, two of the following documents in the name of the Proprietary concern must be submitted.
- Registration certificate (in the case of a registered concern)
- Certificate/license issued by the Municipal authorities under Shop & Establishment Act,
- Sales and income tax returns
- CST/VAT certificate
- Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
- A license issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities,
- Registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/ Department, etc.
- Banks may also accept IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT as an identity document for opening of the bank account etc.
- The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
- Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
Opening a Bank Account for a Partnership Firm
For opening a bank account for a Partnership Firm in the name of the Partnership Firm; legal name, address, names of all partners and their addresses, telephone numbers of the firm and partners must be provided. In addition, the following documents must be submitted.
- Registration certificate, if registered
- Partnership deed
- Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf
- Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses
- Telephone bill in the name of firm/partners
Opening a Bank Account for a Company
For opening a bank account for a Company; the name of the company, principal place of business, mailing address of the company and telephone number must be provided. In addition, the following documents must be submitted.
- Certificate of incorporation and Memorandum & Articles of Association
- Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account
- Power of Attorney granted to its managers, officers or employees to transact business on its behalf
- Copy of PAN allotment letter
- Copy of the telephone bill
Opening a Bank Account for a Trust / Society / Foundation
For opening a bank account for a trust/society/foundation; names of trustees, settlors, beneficiaries and signatories, names and addresses of the founder, the managers/directors and the beneficiaries and telephone/fax numbers must be provided. In addition, the following documents must be submitted.
- Certificate of registration, if registered
- Power of Attorney granted to transact business on its behalf
- Any officially valid document to identify the trustees, settlors, beneficiaries and those holding Power of Attorney, founders/managers/ directors and their addresses
- Resolution of the managing body of the foundation/ association
- Telephone bill
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