How to Open a Current Account for Your Startup
Three to ten days, one board resolution and a pile of KYC. Here is the document list, how to choose a bank you will not regret in year two, and the mistake that delays INC-20A.
A company is a separate person in law, and that person needs its own bank account. Running company money through a founder's savings account is the fastest way to a messy audit, a disallowed expense and an awkward conversation during due diligence.
The good news: SPICe+ already sends a bank account request as part of incorporation, so you may find a partly opened account waiting. The rest is documents.
What the bank will ask for
| Document | Note |
|---|---|
| Certificate of Incorporation | With your CIN on it |
| Memorandum and Articles of Association | The set filed with the Registrar |
| Company PAN | Issued along with incorporation |
| Board resolution | Naming the bank, the account and who can operate it |
| KYC of every director and of anyone holding 25% or more | PAN, Aadhaar, photographs |
| Proof of the registered office | Utility bill, rent agreement, NOC from the owner |
| GST certificate, if you have one | Not mandatory, but it speeds things up |
Most banks now do the whole thing digitally with one video KYC call and a courier for wet signatures. Expect three to ten working days. The two things that stall it are a registered office address the bank cannot verify, and a director travelling when the video call is scheduled.
Pay in the share capital properly
This trips up a lot of first time founders. Each shareholder must transfer the money for their own shares from their own bank account. One founder paying the whole subscription and settling up later creates a problem you cannot fix afterwards.
You need this done before you can file INC-20A, the declaration of commencement of business, which is due within 180 days of incorporation. The bank statement showing the subscription money is the evidence. Miss the deadline and the company is liable for ₹50,000 with ₹1,000 a day on each director.
Choosing a bank, which matters more than the branch
The interest rate is zero everywhere. What separates them is the plumbing.
- Minimum balance. Anything from zero balance startup products to ₹1 lakh average monthly balance. Non maintenance charges are real money in year one, so read that schedule.
- Payouts and payroll. If you will pay twenty vendors and ten salaries a month, bulk payment files and a decent net banking interface save your finance person days a year.
- Foreign inward remittance. If you bill overseas clients, ask specifically about how they handle inward remittance and whether the FIRA or FIRC comes automatically. Chasing certificates for a GST refund is miserable.
- APIs and integrations. If you are collecting payments online, check that the account plays well with your payment gateway and your accounting software.
- A human being. A relationship manager who answers the phone is worth more than any feature. Ask other founders in your building.
One caution on neobanks. Several popular startup banking products are software layers sitting on a partner bank. That is fine, but know whose bank account it actually is, and check what happens to your money and your statements if the partnership changes.
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Get these switched on at the same time
- Net banking with at least two users, so the company does not depend on one person's phone
- A corporate debit card for subscriptions, and set a limit on it
- Maker and checker approvals once you are past a handful of payments a month
- An account aggregator or direct feed into your accounting software, so bank entries reconcile themselves
Housekeeping that saves you later
Never mix personal and company money. Not even for a day, not even as a loan you intend to reverse. Every rupee in and out should have a purpose an auditor can read.
Keep one primary account. Founders open a second account for a better deal and end up reconciling two sets of statements for a saving of a few thousand rupees.
Update the mandate when a director leaves. Signatory changes need a fresh board resolution, and it is easy to forget until a payment fails.
RBI KYC norms and bank charges change from time to time, so confirm current requirements with the bank you pick.
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