How much money should you keep in your current account?

To address their increased financial needs, businesses in India usually have a current account associated with their banks. A current account provides benefits and lucrative deals which are well-suited for the companies. With a current account, a company can enjoy customized and tailor-made services. A current account enables all kinds of businesses to carry out their financial transactions of high amounts and also provides a range of other benefits that are specifically suited to these businesses.

The basic amount you require to keep in a current account

Having a current account also poses the question of how much money should be kept in your current account. The answer to this question is subjective in nature. Before anything else, you just know that most banks have a requirement of having to maintain a minimum balance.

This Minimum Account balance completely depends on your bank. This it a mandatory requirement by most of the banks. Therefore, this amount will definitely need to be kept in your account. This minimum deposit amount is usually lesser in savings account and is a bit higher in a current account. To know this monthly or quarterly minimum average balance (MAB), you may need to contact your bank. This balance may also vary on the type of current that you have. Yes, there are different types of current account, and you may need to choose the one that suits the best for your business.

Generally, this minimum average balance can be calculated by dividing the sum of your account’s closing balance of one particular month by the number of days in that month. To know the quarterly balance, simply divide by the number of days in that quarter.

How much money should you plan to keep in your current account apart from MAB? 

Apart from the minimum bank balance, you may have any amount of cash in your bank account as you wish. The only thing to keep in mind is, to keep the required amount of cash that you will need to make transactions so that they are processed easily. If you overdraw money from account, i.e., try to dry more amount from your account then there already is, then you have an option of overdraft facility provided for your current account. This overdraft facility is available only for current accounts and not savings accounts. 

For your current account, your MAB and QAB varies and is subjective. The amount that you want to keep apart from these is dependent on your business needs and is your choice. Some businesses may want to keep amount worth a few months of their expenses in their current accounts to be on a safer side. However, this is subjective and completely depends on the business and its size and strength. 

Disclaimer: The above information is subjective and generic in nature. Requirements and rules vary from bank to bank. It is recommended to not substitute this article in place of a professional advice.