Do Banks Offer Interest on Current Accounts?
5 min read | about 2 months ago
Do Banks Offer Interest on Current Accounts?
Banks provide interest on savings accounts but do not offer any kind of interest on current accounts as Regulatory directions do not permit the same. A current account can be explained as no interest consolidating account. When any customer makes a hefty amount of withdrawal from the account beyond the account balance then the account is termed as overdrawn.
Understanding Current Accounts
The current account is also known as a checking account in certain regions and these specific account type helps to enable businesses and self-employed people to manage financial transactions regularly. They are merely different from savings accounts based on their operational elements and other features. A businessman can open a current bank account with an increasing number of daily transactions within the bank. This involves deposits with regular transactions that are also called a demand deposit account. In cooperative and commercial banks current accounts can be opened where amounts can be deposited and withdrawn at any point of time. It is also helpful to make payments to the creditors by optimising cheques. customers can utilise cheque book facility to withdraw money from the current account without getting any interest.
The reason that the current bank account does not provide interest
This particular question is often inquired by those individuals who look for maximising savings and considerable funding allocation. It is true that the understanding of whether a current account can provide interest can have essential impact on the financial condition and decision-making process while opting for a most suitable banking product for the business needs and goals.
The primary role of a current account has always been to improve seamless payment transactions. This involves avoiding a range of financial activities like bill settling, business expenses management and making sure of regular payment operations without any kind of disruptions. The primary reason that the banks do not conventionally pay interest on current accounts is that these accounts are meant to be optimised as a channel for active persistent transactions.
Liquidity
Current accounts have high liquidity which means there is an extreme transaction of money flowing in and flowing out regularly.
Business optimisation
Unlike savings accounts these current accounts are the channels for conducting businesses, not investment so there are no interests. Current accounts are primarily formulated for regular transactions like receiving money and payment fulfilment. These accounts are for frequent deposit, withdrawal and transfer of money.
Convenience
Banks give importance to transactional services and convenience to customers for transacting on their seamlessly. Banks are providing strategies of streamlined online banking services that allow customers to manage their accounts, understand and keep track of the transactions and transfer money to any account based on their convenience through online methods. The current account holder in any bank can have access to financial products and services of the bank like loans, credit cards and other investment strategies. There are opportunities to avail demand drafts or pay orders every month without any expenses.
Conclusion
This can be noticed that as the current account's high liquidity and frequent transactions are responsible for the non-interest payable strategy, there are other perks that it provides which are important for businesses to operate. Unity Small Finance Bank provides facilities for customers like RTGS, IMPS, and NEFT transfers through Online and Offline channels. Further, Unity Bank also offers fairly large free limits on cheque leaves usage enabling customers to transact hassle free. This also enables businesses to pay their vendors strategically without any failure. Businesses can open a current account in any bank by providing a PAN card, certificate of incorporation/registration and documentary proof of the address of the company along with the Identity proof & PAN of the Authorised signatories of the organisation.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
