A business current account is a bank account that a company uses for its business payments, and today it is often opened and run in a mobile app. In India, a current account is the type of account meant for businesses. It pays no interest, because RBI rules do not allow banks to pay interest on current accounts. But it allows any number of payments every day. A savings account is meant for individuals.
Many business current accounts are now sold by fintechs, not only by banks. The fintech builds the app and the card. A partner bank holds the money and the banking licence. The account itself is kept in the bank's core banking system, the software that records every balance. This arrangement is called banking as a service. A fintech that offers bank accounts in this way is a kind of neobank.
Say the founder of a two-person design studio in Udaipur opens one. She downloads the app and enters the studio's PAN and GST number. She completes KYC, the identity check that every bank must do, with her Aadhaar and a video call. The account opens, with a debit card for the studio.
The app then does more than an ordinary bank account. The studio sends invoices to its clients from the app. When a client pays ₹45,000 by NEFT, the app matches the payment to its invoice. The studio pays its five freelancers in one batch through payouts. A client in London can pay in pounds through cross-border payment collection, and the money arrives in the account in rupees. Larger companies can link corporate cards to the account, each with its own limit.
The account also gives the fintech useful data. It can see all the money coming into the studio and going out. So it can offer the studio a small loan, based on that data. These loans are covered under MSME loans. Offering a loan inside an app that is mainly for something else is called embedded finance.
The money is only as safe as the partner bank. The money is held by the bank, not by the fintech. As in any Indian bank, deposits are insured by DICGC, the deposit insurance company, up to ₹5 lakh per depositor in each bank.