Any individual who wishes to sign up for a current account prioritises a few key features, one of which is the daily cash deposit limit. A higher current account cash deposit limit is generally better for any business owner. However, it might not necessarily be the case since it depends on the size of the business in question. Read on to know more about cash deposit limits and their importance for current account holders.
What is a cash deposit limit in the context of a current account?
A current account cash deposit limit is defined as the upper cap that a bank or financial institution applies on the value of account funding allowed within 24 hours. Various factors determine this limit –
- Banks must comply with the RBI’s guidelines:The Reserve Bank of India (RBI) mandates that banks must report cash deposits exceeding ₹50 lakh to the income tax department. Account holders can deposit cash above this limit. Any amount exceeding this limit, however, can attract scrutiny by the IT department.
- Banks generally cap the monthly current account cash deposits of its accounts:Most banks offer the added benefit of not capping the daily cash deposits on their current accounts. However, they have a monthly cap on the amount that can be deposited in their current accounts.
- The current account cash deposit limit generally ranges between ₹2 lakh and ₹3 crore: Most banks follow this cash deposit limit. Please note, however, that premium banking services attract cash deposit fees for larger cash deposit limits.
Current account types and their cash deposit limits:
Here is a brief summary of the different categories of current accounts and their cash deposit limits –
- Normal current accounts have a cash deposit limit of ₹ 2 lakh:These accounts cater to SMEs (small and medium enterprises) for whom banking transaction amounts are generally lower than ₹10-15 lakh.
- Individuals who have zero-balance current accounts can make cash deposits of up to ₹50 lakh monthly:Digital current accounts (which are also zero-balance accounts) are helpful for startup founders.
- Current accounts for Arthiyas (Agri current accounts) have a monthly cash deposit limit of ₹75 lakh:These accounts are tailor-made for individuals in the agricultural sector. Account holders must maintain a MAB (monthly average balance) of ₹5,000.
- Current accounts for trusts allow customers to make monthly cash deposits of up to ₹1 crore:These are current accounts made specifically for trusts and societies.
- Advantage current accounts have a monthly cash deposit limit of ₹ 25 lakh:Retailers, wholesalers, and MSMEs use Advantage current accounts for their daily transactions.
- Current accounts for jewellers have a monthly cash deposit limit of ₹2 crore:These current accounts are specially tailored for individuals in the jewellery business.
- You can deposit cash up to ₹3 crore per month in a Premium current account:Large firms and mid-corporates use Premium current accounts to manage their daily transactions.
In conclusion, if you are looking to open a current account for your business, you must assess the category of your business and check the monthly cash deposit limits set by banks before opening a current account.