How to Open a Current Account in 2026: Documents by Entity, RBI Rules and Video KYC

Opening a current account sounds like a branch-visit formality, but it is where many new businesses lose a week: the bank wants a second proof of business you don't have, a name on your GST certificate doesn't match your PAN, or the account is refused because you already borrow elsewhere. This guide explains how to open a current account in India for a proprietorship, partnership, LLP or company — who needs one, the documents RBI's KYC rules allow for each entity, the borrower rules that changed on 1 April 2026, video KYC, the minimum balance types banks use, and the steps. It does not compare banks; it gives you what you need to compare them yourself. Rules were checked against RBI directions in October 2026.

Quick answer

To open a current account, choose a bank, complete the application online or at a branch, and submit the KYC documents for your type of business. A proprietor gives personal KYC plus any two proof-of-business documents in the firm's name (Udyam, GST, Shops and Establishments licence, utility bills and so on). Firms, LLPs and companies give their registration documents, PAN and a resolution or authority letter.

• Proprietors with only one proof of business can still open an account after a contact point verification

• From 1 April 2026, borrowers with total bank exposure below ₹10 crore can keep a current account with any bank

• Video KYC (V-CIP) is allowed for proprietors and for authorised signatories of companies and firms

• Current accounts pay no interest; banks set minimum balance and free-transaction limits by plan

What a current account is — and who needs one

A current account is a deposit account built for business transactions. You can deposit and withdraw any number of times, issue cheques in the business name, receive card and UPI settlements, pay suppliers and salaries in bulk, and — once a bank knows you — get an overdraft or cash credit limit attached. RBI's deposit rules define it as a non-interest-bearing demand deposit, so the bank earns from the balance you leave with it and from charges, not by paying you.

You need one if you trade under a business name or as a separate legal entity. A partnership firm, LLP or company must bank in its own name; a director's or partner's personal savings account is not the entity's account. A proprietorship is legally the same person as the proprietor, so a small freelancer can run on a savings account at the start, but most proprietors switch once they start issuing invoices in a trade name, register for GST, accept card payments or apply for a loan. Payment gateways, marketplaces and government buyers usually insist on settling money into an account whose name matches your invoices and GST registration.

There are practical reasons too. Banks often flag savings accounts that show heavy business turnover and ask the customer to move to a current account. A lender assessing your working capital or a term loan wants a clean, separate business statement, and so does your accountant at year-end. Mixing household and business spending in one account makes both harder to read and invites questions from the tax department about cash deposits.

Savings accounts still have a role: they pay interest and suit personal money. Keep the two apart from day one and pay yourself a fixed drawing from the current account into your savings account.

Documents required to open a current account, by entity type

Every bank's form looks different, but the minimum documents come from RBI's KYC rules. For commercial banks these now sit in the Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025, issued on 28 November 2025, which consolidated the 2016 Master Direction. Banks can ask for more under their own risk policies — a board resolution format, a photograph, a declaration of beneficial owners — but they cannot refuse an account just because you used one permitted document rather than another.

For every individual involved — the proprietor, each partner, designated partner, director or authorised signatory — the bank does customer due diligence: PAN (or Form 60 where PAN isn't held), a recent photograph, and an officially valid document such as proof of possession of Aadhaar, passport, driving licence, voter ID, NREGA job card or an NPR letter. Aadhaar-based e-KYC or a CKYC identifier lets the bank pull this electronically.

If you haven't set the entity up yet, see our guides to partnership firm registration, LLP registration and private limited company registration, and get the entity's PAN first through PAN for business. Banks will also ask companies, firms and trusts to declare beneficial owners — the individuals who ultimately own or control the entity — and will do KYC on them.

Proprietorship: the two-document rule in practice

The proprietorship is where most current account applications stall, because a proprietorship has no registration certificate of its own. RBI's KYC rules solve this by accepting any two of these documents, or their e-versions, as proof of the business:

Proof of business accepted for a proprietorship (any two)

0/8

• Registration certificate issued by the government, including the Udyam Registration Certificate
• Certificate or licence issued by the municipal authority under the Shops and Establishments Act
• Sales and income tax returns
• CST, VAT or GST certificate
• Certificate or registration document issued by sales tax, service tax or professional tax authorities
• IEC issued by DGFT, or a licence or certificate of practice issued by a statutory professional body
• Complete income tax return (not just the acknowledgement) in the proprietor's name showing the firm's income, authenticated or acknowledged by the tax authorities
• Utility bills such as electricity, water or landline telephone bills in the name of the firm

Share Print

The quickest pair for most new businesses is the Udyam certificate plus the GST certificate. Udyam is free, online and usually issued the same day — see our Udyam registration guide. If you are below the GST threshold, pair Udyam with a Shops and Establishments registration or a municipal trade licence; most states now issue these online in a few days. A professional — a chartered accountant, doctor or architect — can use the practice certificate from their statutory body as one of the two.

If you genuinely have only one document, the rules allow the bank, at its discretion, to accept a single proof after a contact point verification — an officer visits or calls to confirm that the business actually operates from the stated address. Expect this to take a few extra days, and expect the bank to restrict cheque books or limits until the visit is done. Don't try to manufacture a second document by putting an electricity bill into the firm's name at a residential address you don't use for business; the address on the account must be the place where you actually trade, and mismatches are a common reason accounts get frozen later.

Three rejections come up again and again. The first is a name mismatch: the trade name on the GST certificate reads "Sharma Traders" while the Udyam certificate says "Sharma Trading Co." Fix it by updating one registration so both match before you apply. The second is an address mismatch between the documents and the premises, solved the same way. The third is an income tax return submitted as proof of business when it shows only salary or doesn't mention the business — the rules require a complete return reflecting the firm's income.

RBI rules on current accounts for borrowers (2020 to 2026)

If your business already borrows from banks, a separate set of RBI rules decides which banks may give you a current account. They exist because borrowers used to route sales receipts through current accounts at non-lending banks, leaving the lender blind to cash flows. The rules have changed three times, and many bank websites still describe an older version.

How the current account rules for borrowers have changed

6 Aug 2020

RBI circular 'Opening of Current Accounts by Banks – Need for Discipline': no current accounts for CC/OD borrowers; escrow for exposure of ₹50 crore and above; non-lending banks limited to collection accounts

14 Dec 2020

Exemptions for accounts required by statute or regulators, and project-specific accounts

19 Apr 2022

Consolidated circular: no restriction below ₹5 crore exposure (with an undertaking); 10% rule for larger borrowers

11 Dec 2025

Credit Risk Management Amendment Directions replace the chapter with new Chapter XIA

1 April 2026

New rules in force: threshold ₹10 crore; two largest lenders allowed when no bank meets 10%

Under the rules that apply now, the starting point is the banking system's aggregate exposure to you — sanctioned fund-based and non-fund-based limits across commercial banks (including small finance, local area and regional rural banks) and urban and rural co-operative banks. Payments banks don't count.

• Exposure below ₹10 crore: any bank may open and maintain your current or overdraft account without restriction. This covers the vast majority of micro and small enterprises, including those with a cash credit limit.
• Exposure at or above ₹10 crore: a bank may maintain your current or OD account only if it has at least 10% of the banking system's total exposure to you, or 10% of your fund-based exposure. If no bank, or only one bank, meets that test, the two banks with the largest exposure may maintain them.
• Other banks may open only collection accounts. Money credited there must be passed on to your designated CC, current or OD account within two working days, after statutory dues and the bank's own dues are debited.
• Cash credit accounts are treated separately as working capital facilities and are not restricted by this chapter.

Some accounts are outside the 10% test altogether: accounts that FEMA requires, accounts that a statute, regulator or government instruction requires, and accounts that regulated entities use for regulated activities. Banks may also offer limited "product-linked" current accounts under a board-approved policy, but these cannot have cash transactions, customer-discretion debits, cards or cheque books.

Banks must review these accounts at least once every half-year. If your borrowing grows and an account becomes ineligible, the bank must tell you within a month and convert it into a collection account or close it within three months. So if you are approaching the threshold, plan which bank will hold your operating account before a large term loan is sanctioned.

A worked example: a garment exporter has a ₹6 crore cash credit with Bank A and a ₹2 crore term loan with Bank B — ₹8 crore in all. Below the threshold, it can hold current accounts with Bank A, Bank B and a third bank near its factory. If it adds a ₹4 crore packing credit with Bank A, total exposure becomes ₹12 crore; Bank A (₹10 crore) and Bank B (₹2 crore, about 17%) both pass the 10% test, but the third bank can keep only a collection account.

Minimum balance types and charges, explained without the sales pitch

Because current accounts pay no interest, banks recover costs through balance requirements and fees, set by each bank's board-approved policy. Plans differ by name, but they are built from a few common pieces. Understanding them lets you compare plans on your own transaction pattern rather than the brochure headline.

How banks measure the balance on a current account plan

Type	How it is calculated	Who it suits	Watch for
Average monthly balance (AMB)	Sum of each day's closing balance ÷ days in the month	Steady businesses with predictable cash	A few low days can pull the average under the limit
Average quarterly balance (AQB)	Same, averaged over the quarter	Seasonal businesses	Shortfall charged once a quarter, often in a lump
Balance-linked free limits	Free cash deposits or transactions rise with the balance you keep	Cash-heavy retail and distribution	Cash deposit charges once you cross the free limit
Zero or low balance plans	No balance condition, but a monthly fee or tighter free limits	New and online businesses	Per-transaction fees and branch restrictions

Average monthly balance (AMB)

How it is calculated

Sum of each day's closing balance ÷ days in the month

Who it suits

Steady businesses with predictable cash

Watch for

A few low days can pull the average under the limit

Average quarterly balance (AQB)

How it is calculated

Same, averaged over the quarter

Who it suits

Seasonal businesses

Watch for

Shortfall charged once a quarter, often in a lump

Balance-linked free limits

How it is calculated

Free cash deposits or transactions rise with the balance you keep

Who it suits

Cash-heavy retail and distribution

Watch for

Cash deposit charges once you cross the free limit

Zero or low balance plans

How it is calculated

No balance condition, but a monthly fee or tighter free limits

Who it suits

New and online businesses

Watch for

Per-transaction fees and branch restrictions

The charges that actually move your monthly cost are usually cash handling (free cash deposit per month and the per-thousand fee above it), deposits at non-home branches, cheque book leaves beyond the free quota, outward transfers in bulk, and the penalty for missing the average balance. Bank charges are financial services and attract GST at 18%, which a GST-registered business can usually claim as input tax credit if the bank shows its GSTIN on the charge statement.

To compare plans sensibly, take your last three months of transactions — cash deposited, cheques issued, number of transfers, average balance — and price each shortlisted plan against that pattern. A plan with a ₹1 lakh balance condition and generous free cash deposits can be cheaper for a kirana store than a zero-balance plan that charges for every cash deposit. If you accept many card or UPI payments, check how the bank's merchant settlement and fees work too; our payment fee calculator helps estimate the gateway side.

Video KYC and opening a current account online

Most banks now let you start a current account application online, and RBI's KYC rules allow video-based customer identification (V-CIP) for business customers. A bank may use V-CIP for the proprietor of a proprietorship and for authorised signatories and beneficial owners of companies, firms and other legal entities. A bank officer conducts a live video call, sees your original PAN, verifies your identity from Aadhaar or another permitted document, captures a live photograph and checks that you are physically in India.

Online opening still needs the entity documents uploaded in clear, complete form — the full partnership deed, all pages of the MoA and AoA, a signed board resolution. Many banks complete the identity check on video and then send an officer to verify the business address or ask you to visit a branch for the original signature of a company's authorised signatories. Treat "fully digital" as "mostly digital" and keep a day free for a follow-up.

Practical tips for a smooth video call: use good light and a stable connection, have your original PAN card and a white sheet with a pen ready for a specimen signature, keep the business address proofs open on screen, and make sure the mobile number linked to your Aadhaar works. If the call drops or your face doesn't match the photo on file, the bank will usually ask you to repeat it or come to a branch.

Step-by-step: how to open a current account

Opening a current account

1. 1

   Fix your entity and registrations first

   Get the entity's PAN and the registrations you will use as proof — Udyam, GST, Shops and Establishments or the deed and incorporation documents. Make sure the business name and address are spelt the same on all of them.

   Tip: A proprietor below the GST threshold can use Udyam plus a Shops and Establishments licence.

2. 2

   Shortlist plans on your own transaction pattern

   Estimate monthly cash deposits, transfers and average balance, and compare two or three banks' plans on that basis. If you borrow, check the exposure rules before choosing which bank will hold your operating account.

3. 3

   Apply online or at a branch

   Fill in the account opening form, nominate authorised signatories and choose the operating instructions (any one, jointly, or as the resolution says). Upload or hand over the KYC documents.

4. 4

   Complete KYC — in person or by video

   Identity is verified through Aadhaar e-KYC, CKYC, V-CIP or a branch visit. The bank may schedule a contact point verification at your business address.

5. 5

   Fund the account and activate services

   Make the initial deposit if your plan requires one, then activate internet banking, UPI collection, cheque book and debit card. Register for Positive Pay before issuing high-value cheques.

6. 6

   Update your registrations and customers

   Add the account to the GST portal as a bank account of the business, to your invoices, payment gateway and marketplace settlement settings, and to tax and payroll registrations.

Once the account is live, add it to your GST registration through a non-core amendment, print it on invoices — our invoice generator has a field for it — and give it to customers in writing so payments don't keep landing in an old personal account.

Common mistakes and how rejections get fixed

Most refusals and delays trace back to a handful of avoidable problems. Applying with mismatched names or addresses across documents is the biggest; fix the registration rather than asking the bank to "adjust". Submitting a rent agreement as the only proof of a proprietor's business doesn't work, because a rent agreement isn't on RBI's list of proofs of business — use it as supporting evidence of address alongside two listed documents.

Companies and LLPs often stumble on the board resolution: it must name the bank, authorise opening the account and specify who may operate it and how. A resolution signed by one director authorising himself, without the required quorum, gets returned. Partnerships sometimes submit an unregistered deed while claiming to be registered; an unregistered firm can still open an account, but under the documents for an unincorporated association.

If you already borrow, don't open a current account at a new bank to "keep some money away" from your lender. Under the rules that apply from 1 April 2026, a bank that finds your exposure above the threshold must convert that account into a collection account. Tell the new bank about your existing loans upfront; it will ask anyway when it checks your credit report, and your CIBIL score report lists every lender.

Finally, keep KYC current. Banks periodically update customer KYC; if a partner retires, a director changes or the business moves, inform the bank with the updated documents within the time its policy asks. Accounts with outdated KYC can be partially frozen until you comply.

After the account is open: cheques, clearing and good habits

Cheque clearing changed in late 2025. RBI moved the Cheque Truncation System to continuous clearing with settlement on realisation from 4 October 2025, so a cheque deposited in the presentation session can be credited the same day instead of the next working day. The second phase, which would have forced drawee banks to confirm cheques within three hours, was deferred in December 2025 until further notice, so treat same-day credit as likely but not guaranteed.

Faster clearing makes the Positive Pay system more important. Before you issue a high-value cheque, you send the bank the cheque number, date, payee, amount and account details through net banking or the app; the cheque is matched against these when presented, and a mismatch is returned. Many banks require Positive Pay for large cheques, and cheques confirmed through it get the protection of the clearing system's dispute resolution, so register it as soon as the account is active.

Good habits from the first month save trouble later. Route every business receipt and payment through the account, avoid large unexplained cash deposits, pay yourself a fixed monthly drawing, and reconcile the statement with your books every month. When you apply for a loan, overdraft or government tender, twelve months of clean current account statements are the evidence lenders and buyers trust most.

Official links

• RBI — Commercial Banks KYC Directions, 2025Current KYC rules for banks
• RBI — KYC Master Direction 2016 (proprietorship documents, V-CIP)Paras 18 and 27–33A
• RBI — Credit Risk Management Amendment Directions, 2025Current, CC and OD account rules from 1 April 2026
• RBI — Continuous cheque clearing circularCTS changes from October 2025
• Udyam Registration portalFree proof of business for proprietors
• GST portalRegistration certificate and bank account amendment

What to do next

If you are a proprietor, get your free Udyam certificate and one more registration in the same business name, then shortlist two or three current account plans against your real transaction pattern. If you borrow, add up your sanctioned limits across banks first so you know whether the ₹10 crore rule affects your choice. Once the account is running, plan your cash cycle with the working capital calculator.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Which documents are needed to open a current account for a proprietorship?

You need the proprietor's own KYC (PAN and an officially valid document such as Aadhaar) plus any two proof-of-business documents in the firm's name — for example the Udyam certificate, GST certificate, Shops and Establishments licence, professional tax registration, IEC or utility bills. If you genuinely have only one, the bank may accept it after a contact point verification at your premises.

Can I open a current account without GST registration?

Yes. GST registration is only one of several documents RBI's KYC rules accept as proof of a proprietor's business. A trader below the GST threshold can use the free Udyam certificate together with a Shops and Establishments licence, a municipal trade licence or utility bills in the firm's name. Partnerships and companies use their deed or incorporation documents instead.

Can a borrower with a cash credit account open a current account in another bank?

From 1 April 2026, if the banking system's total exposure to you is below ₹10 crore, any bank may open and maintain a current account for you without restriction. At or above that level, only banks holding at least 10% of your exposure (or the two largest lenders) can maintain current or overdraft accounts; others may open only collection accounts.

Can I open a current account online through video KYC?

Yes. RBI's KYC rules allow banks to use video-based customer identification (V-CIP) for the proprietor of a proprietorship and for authorised signatories and beneficial owners of companies, firms and other entities. You still upload entity documents, and the bank may verify your business address separately before allowing cheque books or higher limits.

Do current accounts pay interest?

No. RBI's deposit-interest rules treat a current account as a non-interest-bearing demand deposit. Banks recover their costs through minimum balance requirements and transaction charges instead. If you keep large idle balances, ask the bank about a sweep facility into a fixed deposit, which is a separate product with its own terms.

How long does it take to open a current account?

With complete documents, many banks activate a proprietorship or company current account within two to seven working days. Video KYC can cut this to a day for straightforward cases. Delays usually come from a mismatch between names on documents, a missing second proof of business, or a pending address verification visit.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025 (updated October 2026) — Reserve Bank of India · accessed 9 October 2026
2. 2.Master Direction – Know Your Customer (KYC) Direction, 2016 (updated 14 August 2025) — Reserve Bank of India · accessed 9 October 2026
3. 3.RBI (Commercial Banks – Credit Risk Management) Amendment Directions, 2025 — RBI/2025-26/141, 11 December 2025 — Reserve Bank of India · accessed 9 October 2026
4. 4.Introduction of Continuous Clearing and Settlement on Realisation in CTS — RBI/2025-26/73 — Reserve Bank of India · accessed 9 October 2026
5. 5.Master Direction – Interest Rate on Deposits, 2016 — Reserve Bank of India · accessed 9 October 2026
6. 6.Opening of Current Accounts and CC/OD Accounts — consolidated circular explained (April 2022) — King Stubb & Kasiva · accessed 9 October 2026
7. 7.RBI guidelines on current account and OD facilities: key provisions — Vinod Kothari Consultants · accessed 9 October 2026
8. 8.Implementation of cheque clearing phase 2 postponed until further notice — Business Standard · accessed 9 October 2026