Business owners often need to transact frequently on a daily basis for bulk payments to vendors, receiving payments from customers, paying wages to employees, etc. Rather than a savings account that lets people save money and earn interest, a current account is a more suitable option with fewer limitations but no interest payout. However, before opening an account, most customers are concerned about the minimum balance they must maintain. A current account Kotak has minimum balance requirements, but the exact amount varies according to the type of account one opens. Here’s an overview.

What is a Minimum Balance Requirement?

The minimum balance requirement is a financial obligation banks impose on their current account-holding customers. Due to more flexibility in cash deposits and withdrawals, banks must handle more daily transactions, and the money stays with them for a very short period. That is why they require the current account holders to maintain a minimum balance. 

The minimum balance requirement varies for banks and various current account types. For instance, the minimum balance requirement for a current account at Kotak varies between Rs. 10,000 and Rs. 1,50,000. Remember, the minimum balance requirement for current accounts is higher than for savings accounts due to higher flexibility and lower restrictions.

You also must know that a bank requires maintaining the minimum balance on a quarterly basis. They calculate it as the average daily closing balance for each day for a period of three months. Although zero-balance current accounts are also available, they have limited services and flexibility compared to a regular current account. 

What Happens if the Account Balance Goes Below the MAB Requirement?

The holder must pay the non-maintenance charges if the account balance falls below the minimum requirement. For instance, for an Advantage current account Kotak (A Kotak Product), the non-maintenance charges are Rs. 2,000 per quarter plus service tax. The charges may vary based on the account type. The bank may freeze the account and take legal action for non-maintenance for a long time.

Minimum Balance Requirements for Different Types of Current Accounts at banks like Kotak811

These are the minimum balance requirements for different types of current account Kotak:

• Neo Current Account: Rs. 10,000 per quarter
• Edge Current Account: Rs. 25,000 per quarter
• Pro Current Account: Rs. 50,000 per quarter
• Merchant One Current Account: Rs. 50,000 per quarter
• Merchant One Premium Current Account: Rs. 1,00,000 per quarter
• Elite Current Account: Rs. 1,00,000 per quarter
• Astra 15 Current Account: Rs. 15,00,000 per quarter
• Ace Current Account: Rs. 2,50,000 per quarter
• Astra 05 Current Account: Rs. 5,00,000 per quarter

Pros and Cons of a Zero Balance Current Account

Although many banks offer zero-balance current accounts, they are not always the perfect financial solutions for businesses. Despite their benefits, they also have limitations one must be aware of. So, let’s discuss the pros and cons to make an informed decision for a better future:

Pros:

• Easy access to the required funds with high liquidity and fewer limitations on deposits and withdrawals
• Freedom to send and receive money as required 
• Account holders don’t need to maintain any minimum quarterly balance in the account
• With records of each transaction with the bank, business owners can successfully track their business expenses and finances.
• Current account holders enjoy the online banking facility to run smooth operations.
• A current account lets a business build a credit score without locking any money into the account.

Cons: 

• A zero-balance current account with no MAB requirement often lacks add-on features like overdraft, cheque issuance, business tool integration, etc.
• Although there is no minimum balance requirement, a zero-balance current account often charges a fee per transaction, making it more expensive.
• Account holders with zero balance current accounts have limited access to credit lines and loans
• As the business grows, its needs evolve, and a restrictive zero-balance current account cannot fulfil them. Therefore, eventually, they will need to switch to a regular account. 

A current account is the best platform for companies with frequent cash flows. Although such accounts have minimum balance requirements, they are often nominal, and business owners usually do not face difficulty maintaining them. One must choose the type of current account Kotak suitable to their needs and gain financial freedom without any restrictions on transactions. However, maintain the minimum balance required to enjoy all the benefits a current account can bring.