Definition
A current account is a type of bank account used for day-to-day transactions mostly by businessmen and professionals. It is used for activities such as paying bills, receiving income, or making purchases. The account does not offer interest on capital but provides high liquidity, higher transaction limits, unlimited deposits and withdrawals, and facilities such as overdraft.
Case Study
Aditi owns a small bakery and needs a way to manage her daily business transactions. She opens a current account that offers her features like unlimited transactions, check-writing, and a debit card for business expenses. This allows her to handle daily cash flow easily. She also receives customer payments in the account and uses the account to pay suppliers, employees, and utility bills.
Historical Reference
The concept of deposit banking emerged in medieval Italy where merchants deposited their money with bankers for safekeeping. These early forms of current accounts allowed merchants to issue instructions to their bankers to make payments on their behalf.