If you have a bank account, then you probably visit the bank for your transaction needs or access your account through internet banking. Banks in India usually offer their customers two types of bank accounts. One is a savings account and the other is a current account.
Savings accounts are mostly for retail customers where a sole person is responsible for the running and maintenance of this banking account. This type of banking can also be referred to as consumer banking. The main aim of this account is to enable individuals to deposit their personal savings and carry out the financial transactions needed in daily life.
Businesses in India, on the other hand, primarily use current accounts with their banks to meet their ever-increasing financial needs. A current account offers businesses high-end services that are otherwise not available with a savings account. With a current account, a company can enjoy a range of benefits. A few of these are: a higher number of daily transactions, greater transaction limits, overdraft and demand draft facilities, and many other specialized services.
If you are an individual with a savings account who has a growing business, then chances are that you may even want to have a current account. Have you ever wondered if your savings account can be converted into a current account?
As per the rules and regulations set up by the Reserve Bank of India (RBI), one cannot convert their savings account into a current account.
A major reason why this decision makes sense is because of the fundamental difference between these two account types. The purpose of these accounts is different and so is the customer base that they cater to.
So, what can you do if you are not able to convert your savings account into a current account?
If you already have a savings account, it is recommended that you open another current account with the bank of your choice. Or, since you can not convert your account type, you can close your savings account and open a current one. However, this latter option is not a recommended one. It is much better to have a current account opened separately along with your savings account.
This is great since you can sort your financial planning and needs accordingly. You can use your savings account purely for your personal finances, all the while keeping your business completely separate. This helps in maintaining a balance between personal and professional finances. Keeping just a single account for your business and personal needs is not a smart move.
Having both savings and a current account is also beneficial while availing tax deductions. A savings account has its own perks, and so does a current account. Hence, having both of these is more of a necessity.
Disclaimer: The above article is subjective and generic in nature. It is purely for informational purposes and should not be substituted in place of professional advice.