opening business bank account india guide

author Sakshi Bhatt

calender June 19, 2024

Opening a Business Bank Account in India: Complete Guide

Overview of banking in India

The Indian banking system is vigorous and well-regulated. The Reserve Bank of India (“RBI”) administers all banking operations across India. It ensures the stability and efficiency of the financial system in India. There are various types of banks in India i.e., public sector banks, private sector banks, foreign banks, cooperative banks, and regional rural banks. These banks provide wide range of services and products adapted to the needs of individual or businesses, including current accounts, term deposits, overdraft facilities, and various online banking options.

Key features to consider while opening a bank account in India

  1. Account Type: While selecting a bank, one should consider the type of account and its benefits provided by that bank. Generally, Indian banks provide below mentioned account:
    • Savings Account: This account is commonly used by individuals who doesn’t possess any business income;
    • Current Account: This account is generally opened by people who are engaged in trade, businesses and professions. Most of the bank provide different types of current account having special benefits in accordance with the customer needs.
  2. Minimum Balance Requirements: Another key factor is to check the minimum balance requirements provide by the banks. Usually, different banks have different policies on maintenance of minimum balances.
  3. Fees and Charges: Before choosing a bank, one should be aware of maintenance fees, transaction fees, and any other charges like cash withdrawal fee, cheque book issuance fee, foreign transaction fee.
  4. Online Banking Facilities: While selecting bank one should ensure that the bank offers online and mobile banking services. As in this digital age, it becomes convenient for the person to easily access the services without visiting the regional office.
  5. Customer Service: The most important factor is customer service. One should select the bank who provides accessible and responsive customer service.
  6. Accessibility of Branches and Automated teller machine (ATM) Network: A wide network can facilitate easier access to banking services.
  7. Security and Reputation: Always choose a bank with a strong reputation for security and reliability. Additionally, one should ensure that the bank is regulated by the RBI & has a good track record of safeguarding customers’ assets.

Opening a bank account in India

Nowadays, it has become more convenient to open a bank account due to digitalization. The emergence of advanced technologies has significantly reshaped the banking sector. Usually, a bank takes 7-10 working days to open a bank account. However, it may take some time depending upon internal procedures adopted by different banks, type of account, nationality of customer etc. It is pertinent to note that different banks have different processes / procedure for opening a bank account.

Overall, all the banks in India follows the same process / procedure as governed by the RBI with respect to opening of a bank account, however, the documentation may vary depending upon their internal guidelines or policies.

A general process for opening a bank account is outlined below :

  • Step 1: To Submit the requisite documents and information with the bank
  • Step 2: Verification of the registered office address of the company by the bank.
  • Step 3: Verification or examination of the identity and address of the directors and authorized signatory including beneficial owners by the bank.
  • Step 4: Examination of the documents and search report by the internal team of the bank.
  • Step 5: Opening of a Current account.

The aforementioned process is used for the opening of bank accounts for all types of customers like individuals, body corporate, association of persons and individuals. The only difference is the set of documents that are required to be submitted during the opening of bank account.

The list of documents and details which is required to be submitted for opening a bank account for different entities is outlined below:

A. List of documents required for opening a bank account for a company

  • Certificate of incorporation;
  • Memorandum of Association (MoA) and Articles of Association (AoA);
  • A copy of board resolution;
  • List of directors;
  • Communication address proof of the company, if it is different with the address mentioned on Certificate of registration;
  • Current landline/ mobile number and e-mail ID of the company;
  • Permanent Account Number (PAN) of the company;
  • Latest passport-size colour photograph of each of the authorized signatories;
  • A copy of one valid photo identification and address proof of each of the authorized signatories and directors;
  • Shareholding pattern/ list of beneficial owners holding more than 10% in the company either directly or indirectly;
  • Permanent Account Number (PAN)/ identity proof of such beneficial owners as identified above;
  • Address proof of such beneficial owners as identified above;
  • Identity and address proof of the Senior Managing Official in case the ultimate natural person is not identified as the beneficial owner;
  • Account opening Cheque from existing account.

B. List of documents required for opening a bank account for a Liaison/ Representative office/ Project office/ Branch office in India

  • Certificate of Incorporation (COI) and company formation documents (as applicable in the respective country);
  • Communication address proof of the entity. It is pertinent to note that only Indian communication address proof is acceptable by the bank;
  • Current landline/ mobile number and e-mail ID of the entity;
  • Permanent Account Number (PAN) of the entity;
  • Latest passport-size colour photograph of each of the authorised signatories;
  • A copy of one valid photo identification and address proof of each of the authorised signatories.
  • Shareholding pattern/ list of beneficial owners holding more than 10% in the company either directly or indirectly;
  • PAN/ identity proof of such beneficial owners as identified above;
  • Address proof of beneficial owners as identified above;
  • Permission to set up office as mentioned below;
  • Account opening cheque from existing account.

    Additional list of documents in case of Liaison/ Representative Office

    • Copy of permission from the RBI is required, or
    • Copy of Insurance Regulatory and Development Authority (IRDA) approval for foreign insurance companies.

    Additional list of documents in case of Branch Office

    • Copy of RBI permission to open a Branch Office in India is required, or
    • For banking company, a copy of approval under provisions of The Banking Regulation Act is required, or
    • For branch/ unit in a Special Economic Zone (SEZ), a copy of the certificate to establish a branch/ unit in SEZ is required.

    Additional list of documents in case of Project Office:

    • Duly acknowledged copy of report stating project details made to the RBI is required, or
    • Project/ Contract award letter and Declaration in lieu of the RBI permission for project office and underlying document to confirm the category which is mentioned in the declaration that the project is actually among the categories allowed.

C. List of documents / information required for opening a bank account for a partnership firm in India

  • Latest passport-size colour photographs of authorized signatories of the bank account;
  • Identity and address proof of authorized signatories of the bank account;
  • List of beneficial owners holding more than 10% in the partnership firm;
  • Identity and address proof of such beneficial owners as identified above;
  • Communication address proof of the partnership firm;
  • Permanent Account Number (PAN) of the partnership firm;
  • Current landline/ mobile number and e-mail ID of the partnership firm;
  • Partnership deed;
  • Partnership registration certificate, if registered;
  • Account opening Cheque from existing current account.

D. List of documents / information required for opening a bank account for a trust / society / foundation in India

  • Charter / Constitution documents of the entity, for an instance:
    • The Trust Deed in case of public/ private trust or Bye-laws in the case of society/association/ club;
    • Memorandum of Association or Article of Association in the case of Section-8 / foundation/Non-Government Organizations (NGO) companies;
    • Rules of acts or Gazette notifications in the case of government quasi, government or semi government, entities or entities.
  • A list of directors /members of the managing committee / the managing council;
  • A copy of the proof of identity of the entity, for an instance:
    • Registration certificate issued by the Registrar in the case of societies /by charity commissioner in case of trust or societies engaged in charitable work or certificate of Incorporation issued by Registrar of Companies in case of Section-8 companies;
    • Recognition certificate in case of educational institutions.
  • PAN card or proof of exemption from income tax (if applicable);
  • Proof of communication address of the entity;
  • Latest colour passport size photograph of each of the existing authorized signatories;
  • A copy of one valid photo identification and address proof document of each of the existing authorized signatories;
  • List of beneficial owners holding more than 10% in the Trust;
  • Permanent Account Number (PAN) / Identity proof of such beneficial owners as identified above;
  • Address proof of beneficial owners as identified above;

E. List of documents / information required for opening a bank account for a proprietorship in India

  • Document in the name of the sole proprietorship firm, confirming the name and address, which is issued by a government authority/ department, as registration/ license document;
  • Latest passport-size colour photograph of the sole proprietor;
  • Permanent Account Number (PAN Card);
  • Identity and address proof of the sole proprietor;
  • In case Power of Attorney (POA) has been granted for account operations, photograph, and identity and address proof of the POA holder is also required;
  • Account opening cheque from existing current account.

F. List of documents / information required for opening a bank account for an individual in India

  • A copy of identity proof either PAN Card or Passport or Voter Identity Card or Driving License or Aadhaar Card;
  • A copy of address proof either Passport or Voter Identity Card or Driving License or Aadhaar Card;
  • A copy of business registration certificate, in case of business;
  • Latest colour passport size photograph;
  • Account opening Cheque from existing savings/current Account.

Please note that the aforementioned list of documents may vary from bank to bank depending upon their internal process or RBI guidelines. Also, there shall be separate documentation or attestation (apostille/consularised and notary) requirement in case of foreign nationals.

Conclusion

From the above, we can understand that opening of bank account in India involves several steps and documents based on the type of account holder and nationality of signatories (including beneficial owners). However, by understanding the requirements, one can open a bank account having smooth transition. This will not only help with better financial management but also ensure compliance with legal and regulatory standards.

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