Banks such as IDFC FIRST Bank offer you various banking services to suit your requirements such as personal banking solutions and business banking services. For instance, if you are a salaried person depending on only salary income, you will need a personal account because you will perhaps transact with the bank minimally restricting the account to few pay-ins from salary and few payouts and few withdrawals. If you are a senior citizen depending on pension, interest from other savings, dividends from mutual funds or annuities then too you would open a personal account or a senior citizen account.
Let’s see what is business banking? Business banking is a service offered by banks, apart from personal banking services, to help businesses manage their finances efficiently. Banking has come of age and more importantly, business banking in India has grown by leaps and bounds to offer specialized business banking solutions to the millions of small and medium-sized businesses operating in the country.
If you are a self-employed professional or a businessperson then your business banking needs are far more and you want business banking solutions to accomplish all the requirements of a thriving business. Because the transactions are minimal, the bank distinguishes personal banking solutions from business banking solutions. By its very nature, a business involves many stakeholders from employees to vendors to customers to statutory entities for fulfilling obligations on GST and income tax. Further, your business will require working capital to manage day-to-day running expenses and long-term capital to invest in fixed resources to ensure solvency in business. Thus, it becomes imperative for you to have access to business banking services with their attendant benefits and conveniences.
IDFC FIRST Bank offers a host of business banking solutions to cater to your business needs. As mentioned earlier you will need working capital to ensure you run your business efficiently and smoothly. The reason why you need working capital is that typically, there is a time lag between production and sales – you need funds to procure raw materials, pay salaries, pay electricity or fuel charges and the like. You cannot wait for sales to happen to receive sales proceeds which you then can use to produce more goods. Thus, there is a need for working capital.
With a business account, you have access to various services that would help you to run your business properly. When you open your business account you provide all the information pertaining to your business. With this account, you can then secure a term loan for investing in capital equipment and other capital needs such as a factory or a depot or vehicles. Besides, this account will also offer you solutions for the working capital loan requirements of your business with advantages such as
The main advantage is the drawdown which is need-based.
There are two types of working capital loans for you to choose from and they are
The FD Backed loan is a secured loan where you can bargain for the lowest interest rate (could be a few basis points above the interest rate applicable on your FD).
The cash/credit overdraft is very simple to obtain and operate and it is mainly an unsecured loan extended on the strength and robustness of your business.
The main advantage of these working capital solutions is the facility of withdrawing funds only when you need them. You don’t have to run around breaking your head to look for funds when your business account is showing zero balance. You can withdraw funds from the working capital solution you have opted for just as though you had that funds in your account subject to the limit sanctioned by your bank. You can then replenish the account when you receive funds from your sales. The other advantage is that you pay interest only on the amount you have utilized and not on the sanctioned amount. Yet another advantage is that your bank can increase this limit when your business grows and you require more working capital funds to service the fund requirement of your enhanced business.
As mentioned earlier, business banking in India is evolving and today you can have access to business banking solutions through tie-ups with leading Fintech companies such as Capital Float. These tie-ups are beneficial to you because the lenders provide working capital solutions without any security or collateral from you. Another process of evolution is the increasing incidence of paying interest on your balances in your business account, which hitherto did not qualify for earning interest
IDFC FIRST Bank working capital solutions have transcended the digital divide and uses technology to offer 24/7 access to business banking services through online channels while retaining the familiarity of offline channels. The bank also offers expertise from renowned experts in working capital finance.
It is imperative that you open a business account to take advantage of its features to run your business through meeting your working capital needs smoothly and efficiently.