While managing your personal and business finances through a single account would be easy, you should avoid doing so. Segregating your business finances helps you track your business cash flow and develop strategies to prevent its burn. It also helps you obtain a clear picture of your business's financial standing that you can present during investor pitches. It is also helpful in filing taxes.

You can open a Savings Account to manage your personal finances, while a Current Account to manage your business finances. You would be aware of a Savings Account as it is the most common type of account one opens. What is Current Account? Would be a question in your mind. A Current Account is a deposit account that allows higher value deposits and unlimited transactions, helping you take care of your business financial requirements systematically.

The account also extends the overdraft facility that you can use to meet your short-term capital needs. The RBI is the commanding body in the banking and financial system of India. It makes various rules and regulations to govern financial transactions in India. This article mentions the various RBI rules, regulations, and guidelines for Current Accounts.

RBI guidelines for Current Account opening and operations

• Opening account – The RBI has allowed all banks to open a Current Account for individuals who have not borrowed money from the financial system as per due diligence. However, restrictions apply to individuals with aggregate credit facilities of Rs. 5 Crore and more.
• Collection accounts – Non-banking financial institutions can only open collection accounts. These account balances cannot be used for Loan repayment or for collateral purposes.
• Escrow managing bank – Only escrow managing banks can open Current Account online and maintain for individuals with an aggregate exposure of Rs. 50 Crore and more.
• Term Loans – Term Loan repayments should not be routed through the Current Account, except in certain circumstances.

RBI guidelines to prevent misuse of Current Accounts

• KYC – KYC stands for Know Your Customer requirement. It helps the bank confirm your identity. Every individual must complete the KYC requirement with the bank for account opening.
• Loan and credit cash component – The bifurcation of the Loan and cash credit component with the working capital facilities should be maintained.
• Transaction monitoring—All banks must closely monitor all Current Account transactions to ensure they comply with RBI rules and regulations.
• Compliance with statutes—The RBI emphasises compliance with other regulatory departments, such as the Foreign Exchange Management Act.

Any bank not complying with the RBI rules and regulations will be penalised and face serious legal consequences. Hence, make note of all RBI rules and diligently follow them when you open Current Account online and operate it.

Note that this article mentions only key highlights of the RBI guidelines for Current Accounts. Visit the RBI website for complete and accurate information. You can also contact the bank's customer representative for specific information.