As we established in our previous blog on whether you should choose HDFC's startup current account, making the right choice for your startup’s current account can be a pivotal decision. If not taken carefully, it can significantly impact your company’s financial management, potentially harming both its finances and operations. With a plethora of options available, selecting the best current account in India is a strategic decision many founders regret not giving more thought to. The process of current account opening, and the convenience to open a current account online, are factors worth considering in this crucial choice.
Here's why:
Lack of Unique Banking Requirements: Startups have distinct financial needs; they prioritize flexibility, cost-effectiveness, and value-added services like payroll management and integrations. Opting for a current account that doesn't align with these priorities can be a roadblock to growth, underscoring the importance of understanding the current account benefits and the advantages of a current account tailored to startup needs.Lack of Features: Often, founders overlook the importance of ensuring their current account features work seamlessly with their specific business model. This oversight can lead to inefficiencies, unnecessary fees, and a lack of financial clarity, highlighting the critical role of current account features in the smooth operation of a business.Lack of Transaction Flexibility: Frequent, high-volume transactions are the lifeblood of many startups. A current account with a restrictive transaction limit or high per-transaction fees can quickly stifle progress, making it essential to choose an account that supports your business's dynamic needs.Most current accounts are not cost-effective. Initially, startups operate on tight margins, making minimal fees and charges paramount. The unforeseen expenses associated with a poorly chosen current account, such as not opting for a zero balance current account, can quickly drain resources, emphasizing the need for careful financial planning from the outset.So how do you choose the perfect current account for your startup? That’s exactly what we will be exploring in today’s article, focusing on 3 of the most popular startup current accounts offered, including types of current account in ICICI Bank and ICICI Bank current account types, to guide you in making an informed decision. ICICI’s I Startup 2.0.
Bank accounts under ICICI I-Startup 2.0 for startups ICICI, like many of its competitor banks, offers not just one but multiple options for startup founders. To provide a comprehensive overview of ICICI Bank’s services for startups, we have reviewed all 3 major accounts used by founders, showcasing the variety in icici current account types and icici current account variants available.
I-startup-Tech account I-startup2.0 gold account I startup 2.0 silver account In this article, we will be evaluating all 3 accounts together, with any differences between them being covered within sections of the framework discussed in the next section.
The S.T.A.R.T.U.P Framework Considering this dilemma of founders, Mya has developed a framework to evaluate current accounts specifically for startups, known as the S.T.A.R.T.U.P Framework . In this framework, you evaluate a current account and use a simple scoring method to evaluate the account on the basis of the following:
S - Service Charges: Assess the fees associated with the account, including maintenance fees, transaction charges, and penalties for non-compliance, keeping an eye on ICICI Bank current account charges to ensure they align with your financial strategy.
T - Transaction Limits & Flexibility: Ensure the account offers flexibility in terms of transaction limits and types, and QAB maintenance caters to the dynamic needs of a startup, including considerations for the current account minimum balance.
A - Account Integration: Look for seamless integration with your business operations, accounting software, and other financial tools to streamline processes, enhancing your business banking experience.
R - Rate of Return: Evaluate the interest rates offered on the account balance, seeking opportunities for maximising returns on idle funds, especially if your cash flow pattern allows for a higher balance. It's beneficial to know which bank gives interest on current account in India and the ICICI current account interest rate.
T - Technology: Seek a bank that provides robust online banking platforms, mobile apps, and digital services to support your startup's tech-savvy needs, like the Instabiz app offered by ICICI.
U - Unforeseen Expenses: Consider the availability of overdraft facilities or credit lines to address unexpected financial challenges and maintain liquidity.
P - Partnership Benefits: Explore any partnerships or collaborations the bank offers, such as discounts on services, access to networking events, or startup-specific resources.
Using this framework, we will be evaluating ICICI current account and exploring whether it's the right fit for startups. Then again, be sure to evaluate your startup and industry in particular.
S - Service Charge As discussed previously, looking at service charges is of utmost importance for startups. You do not want to choose a current account with intensive charges, especially if you have a business model that doesn't allow you to maintain high liquidity initially or even in the long run.
Charges for i Startup Tech Account Minimum Average Balance (MAB) Charges
iStartupTech Account: No charges for not maintaining a minimum balance..Debit Card & ATM Charges
Business Gold Debit Card: Free issuance and renewal.ATM Transactions: Free for withdrawals at ICICI Bank ATMs and charges apply for other bank ATMs in India and abroad.Replacement Card/PIN: Rs 200Account Closure Charges:
Within 14 days - Free Beyond 14 days but within 6 months - Rs 1000 After 6 months - Rs 500 Mobile Alerts: Free
Monthly Physical Account Statement: Rs 25
Cheque Return: Rs 750 per instrument (issued by customer)
Signature Attestation: Rs 50 per application/letter
ECS Debit Return: Rs 500 per instance
Branch-Based Transactions: Rs 100 per instance (stop payment, standing instructions, etc.)
Cash Management Service Charges (Optional): One-time setup fee and transaction charges apply for services like I-Multipay, Virtual Account Collection, Multiple Invoice Collection, NACH, PAB, Host-to-Host Integration, and API Integration.
Trade Charges (Optional): Charges apply for various trade services like Advance Import, Direct Import, Import Bills on Collection, Foreign Outward Remittance, Export Bills on Collection, etc., enhancing the value of a trade account.
Charges for Silver & Gold Accounts Minimum Quarterly Average Balance (QAB)
Silver: ₹25,000 Gold: ₹1,00,000 Charges for Non-maintenance of QAB
If average balance < 50% of required QAB:
Silver: ₹3,000 per quarter Gold: ₹6,000 per quarter If average balance >= 50% but < 100% of required QAB:
Silver: ₹2,000 per quarter Gold: ₹4,000 per quarter Account Maintenance:
Product Code: NS050 (Silver), NS01L (Gold)
Minimum QAB Requirement (after initial waiver):
Silver: ₹25,000 Gold: ₹1,00,000 Mobile Alert
₹25 per month (non-individual customer) (Free for both Silver and Gold) Cash Management:
Free cash deposit/withdrawal limit:
Silver: ₹12,00,000 Gold: ₹25,00,000 Charges above free limit (per ₹1,000): ₹3.50 (both Silver and Gold) Minimum charge per transaction: Rs. 50 (both Silver and Gold) Cash withdrawal at non-base location: Silver: ₹2/1,000 Gold: Free upto ₹10 times of MAB (e.g., if maintaining ₹1,00,000 then free upto ₹10,00,000), then standard charges apply (standard charge not specified). Additional Charges (May vary)
DD/PO issuance (Charges not specified) Cheque leaves issuance (Charges not specified) Business Gold debit card (Standard charges apply if not part of Gold plan - charge not specified), making it a valuable option for those holding a business gold card. Other branch-based transactions (e.g., Stop Important Notes
Free limits and charges can change. Refer to ICICI Bank website for latest information. Charges exclusive of GST. NMQAB - Non-maintenance of Quarterly Average Balances Base Location - Branches in the same clearing zone as the account is opened Cash transactions above ₹10 lakh require prior branch intimation. T- Transaction Flexibility i Startup tech Account Here's a breakdown of the transaction flexibility associated with ICICI Bank's current account:
Electronic Transactions
RTGS/NEFT: Free for online transactions, both at the branch and online.IMPS: Free for up to 2500 transactions within the monthly free limit based on MAB. After that:Up to Rs 10,000 - Rs 3.50 per transaction Rs 10,001 to Rs 1 lakh - Rs 5 per transaction Rs 1 lakh to Rs 5 lakh - Rs 15 per transaction Cash Transactions
Cash Deposit: Free for a certain number of deposits based on MAB, with a maximum free limit. Beyond the limit: Rs 3.5 per Rs 1000, minimum Rs 50 per transaction, aligning with the current account cash deposit limit.Cash Withdrawal: Free at all ATMs within India (ICICI Bank and other banks).Non-Cash Transactions
Cheque Collection and Payment: FreeOther Transaction Charges
IMPS (after free limit): Refer to charges mentioned above under Electronic Transactions.Cheque Return (issued by customer): Rs 750 per instrumentECS Debit Return: Rs 500 per instanceBranch Based Transactions: Rs 100 per instance (stop payment, standing instructions, etc.)Cash Management Service Charges (Optional)
Transaction charges apply for services like Virtual Account Collection, Multiple Invoice Collection, NACH, and PAB. Refer to the ICICI Bank website for details. Trade Charges (Optional)
Charges apply for various trade services like Advance Import, Direct Import, Import Bills on Collection, etc. Free Services (up to limit):
Silver:
2 Cheque returns per month (Free) 100 Branch transactions per month (Free) for every ₹1 lakh of balance maintained Gold:
Free Business Gold Debit Card 1st 2 Cheque returns per month (Free) 1st 10 Branch transactions per month (Free) Cheque Handling:
Cheque collection and payment: Free (both Silver and Gold)
Silver: ₹100 per instance Gold: 1st 10 free per month, then standard charges apply (standard charge not specified) Transaction Charges:
RTGS/NEFT payment done online: Free (both Silver and Gold)
RTGS Payment (Branch):
₹2 lakh to ₹5 lakh - ₹20/transactionNEFT Payment (Branch):
Upto ₹10,000 - ₹2.25/tran ₹10,001 to ₹1 lakh - ₹4.75/tran ₹1 lakh to ₹2 lakh - ₹14.75/tran Above ₹2 lakh - ₹24.75/tran (Free for both Silver and Gold) Branch transaction:
Free limit per month:
Silver: 100/lac MAB (e.g., if maintaining ₹50,000 then 50/1 = 50 free transactions) Gold: 150/lac MAB (e.g., if maintaining ₹1,00,000 then 100/1 = 100 free transactions) Then standard charges apply (standard charge not specified)
IMPS payment:
Free limit per month depends on plan Standard charges apply after free limit (standard charge not specified) Silver: Standard charges apply for all transactions Gold: Standard charges apply after 50/lac MAB transactions (e.g., if maintaining ₹1,00,000 then 100/1 = 1000 free transactions).] ₹5 lakh - ₹45/transaction (Free for both Silver and Gold) ICICI Bank's service charges The ICICI Bank current accounts seem to have lower charges on different line items, but on an aggregate, they seem to be cheaper than its competitors like HDFC, etc.
Look into which charges matter to your business model and choose accordingly.
A- Account Integrations ICICI Bank's iStartup 2.0 current account offers the following key integrations and services for startups
Superseva: Provides company registration, ROC filing, GST and IT-related services, property registration, travel, employee engagement, logistics and marketing support through a corporates-focused concierge service.NowFloats: Offers website development and hosting, social media marketing, and SEO management services to help startups establish an online presence.Other partners: The account integrates with services from IndiaFilings, CircleOne, GoDaddy, HRAPP, Awfis, Dell, and Tata Teleservices to provide a range of business solutions.250+ API banking: ICICI Bank's API Developer Portal with over 250 APIs enables startups to co-create innovative customer solutions and integrate the bank's services with their own platforms.Digital banking services: The account provides access to ICICI Bank's InstaBIZ mobile app, Corporate Internet Banking, Trade Online platform, and Integrated Payment System for seamless banking and transactions, enhancing the InstaBIZ experience.Lending and overdraft: Startups can avail instant overdraft facilities up to ₹3 crore against fixed deposits, as well as loans against securities without extensive documentation.In summary, the ICICI iStartup 2.0 account integrates a wide ecosystem of business services, digital banking tools, and lending solutions to cater to the diverse needs of startups beyond just core banking. R-Return Similar to most current accounts, the ICICI Startup Current Account doesn't provide interest on account balances. So, how do you get a return on your money? Here, 'return' refers to the potential gains you can achieve through various investment avenues, including exploring current account interest rates.
ICICI Bank doesn't directly offer investment accounts within the current account, but being an ICICI Bank customer allows you to explore investment opportunities through their platform. Here are some options to consider:
Fixed-Income Investments (Low Risk)
1. Fixed Deposits (FDs):
Rate of Return (ROR): The interest rate for a fixed deposit varies depending on tenure and account type, but typically ranges from 3% to 7.75% p.a., making it a secure investment choice for those looking to earn steady returns.Risk: Low. FDs are considered a safe investment with guaranteed returns.Suitability: This option is suitable for parking short-term surplus funds or funds earmarked for specific short-term goals. However, returns may not outpace inflation, making it essential to weigh the benefits against potential drawbacks.Liquidity: High. Funds are readily available upon maturity or with minimal penalties for early withdrawal.2. Recurring Deposits (RDs):
ROR: Similar to FDs, interest rates vary based on tenure.Risk: Low. RDs are a disciplined savings method with the same low risk as FDs.Suitability: A good option for accumulating funds for specific goals over a longer period.Liquidity: High. Funds are readily available upon maturity or with minimal penalties for early withdrawal.3. Market-Based Investments (Moderate to High RiskMutual Funds:
ROR: The returns on a mutual fund vary significantly based on the chosen fund type (equity, debt, or hybrid) and market performance. Equity funds can offer potentially high returns but also carry higher risk, appealing to those looking for growth opportunities.Risk: Risk levels vary from moderate to high. Equity-based funds can be volatile, offering the potential for higher returns, while debt funds are generally less risky, providing a more stable investment option.Liquidity: Low. These investments are subject to market fluctuations and often have lock-in periods or redemption charges, making immediate access to funds difficult.Suitability: Suitable for long-term wealth creation goals (5+ years) but may not be ideal for short-term needs due to market fluctuations. It's crucial to choose funds based on your risk tolerance and investment horizon.4. Equity-Linked Saving Schemes (ELSS):
ROR: Returns depend on the underlying stock market performance.Risk: Moderate to high. ELSS offers tax benefits but comes with market volatility risks. Suitability: Can be considered for long-term wealth creation with a tax advantage, but be prepared for potential ups and downs.5. Public Provident Fund (PPF):
ROR: Currently offers a 7.0% p.a. interest rate.Risk: Low. PPF is a government-backed scheme with guaranteed returns and tax benefits.Suitability: An excellent option for long-term wealth creation and retirement planning, with attractive returns and tax advantages. However, it has a lock-in period of 15 years.6. National Pension Scheme (NPS):
ROR: Market-linked returns, with an average annual return of around 10-12% in the long run.Risk: Moderate. NPS invests in market instruments, so returns can fluctuate.Suitability: Primarily for retirement planning, with tax benefits and a lock-in period until retirement age.ICICI Bank’s “Return” Though ICICI Bank offers various investment options, remember that restrictions on your available funds might be imposed depending on agreements with your VC or investor.
T - Technology Here's the information we already discussed, incorporating the new points from the official image and pamphlet:
Instant Account Opening: Open an account remotely through the mobile app or online platform.API Banking (250+ APIs): Integrate various financial functionalities directly into your startup's applications or platforms. This allows for customization like real-time account balance displays, in-app bill payments, or automated invoice generation.Digital Solutions: Leverage functionalities through APIs including: Payments API (bulk payments, tax payments, UPI payments),collections API (e-collection, UPI collection),other Banking APIs (account management, trade finance)Cloud-Based Solutions: Data storage and processing for scalability, accessibility, and enhanced security.Data Analytics Tools: Gain insights into cash flow and spending patterns.Emerging Technologies: Integration with AI (automated fraud detection, chatbots) or Blockchain (enhanced security).Focus on Security: Multi-factor authentication, strong encryption, and potential cybersecurity awareness programs.Open Banking Initiatives: Partnerships or functionalities for greater flexibility and customization options.Additional Tech-Focused Features from the Pamphlet:
Smart Vault: Secure access to a locker using a robotic arm and Radio Frequency Identification (RFID). Accessible any time, including holidays.Cash Acceptor: Deposit cash through a machine that counts and authenticates notes, crediting your account in real-time.Software Robotics: Automates over 200 business processes and processes over 1 million transactions daily for efficiency.Robotic Arms: Automate cash counting across India.iWear App: Access banking features on your smartwatch (Google Playstore, App Store, Samsung Gear Manager).General Tech Advancements at ICICI Bank:
Paylater: Uses big data algorithms for credit assessment.Digital Signatures: Simplifies and speeds up banking processes.Voice and Facial Recognition: Simplifies and speeds up banking processes.Video KYC: Simplifies and speeds up customer verification.Cardless Cash Withdrawal: Withdraw cash at ATMs without a card.Personalized Search and Hyper-Personalized Communication: Tailored experiences on the ICICI Bank website.ICICI Bank’s Technology With over 250+ APs, multiple Verification checks, multiple integrations, apps etc. ICICI Bank seems to offer better tech than most traditional banks with the only close competitor being HDFC in this regard.
U- Unforeseen Expenses Overdraft Facility
InstaOD Plus: This unsecured overdraft facility can be availed online without paperwork, serving day-to-day needs and sudden exigencies for businesses. Existing ICICI Bank Current Account customers can get an instant overdraft limit of up to Rs 50 lakh, while non-ICICI Bank Current Account customers can avail up to Rs 25 lakh. The facility is collateral-free, with interest paid on the utilized amount, instant sanction, paperless processing, and no prepayment or foreclosure charges
Insta-Secured Overdraft Facility: ICICI Bank offers an online lending platform called Insta-Secured Overdraft Facility to cater to working capital requirements by providing a secured overdraft facility for businesses, including startups
ICICI Bank’s Ability to Meet Unforeseen Expenses
These overdraft facilities provide startups with financial flexibility and support to manage their cash flow effectively, demonstrating ICICI Bank's commitment to meeting the unique financial needs of startup businesses
P - Partnerships ICICI Bank's iStartup account goes beyond banking. It unlocks a powerful ecosystem for startups. Here's how:
Funding & Investors: Gain access to VCs, Angel Investors, and potential equity investment from ICICI itself.Mentorship & Guidance: Network with industry experts and accelerators like T-Hub and BITS Pilani for invaluable guidance.Growth Resources: Secure co-working spaces, cloud solutions, and business development support through ICICI's network.ICICI Bank's iStartup program extends beyond just banking services. By partnering with various companies, they aim to create a well-rounded ecosystem that supports startups in various aspects of their business journey. Here's a possible breakdown based on the categories you mentioned:
Marketing & HR: (mailmodo, factoTime, NOWFLOATS, greyHR): These partnerships could offer startups discounts or special features on marketing automation tools, HR & payroll software, and recruitment platforms.Co-working Space & Telecom: Discounted rates or bundled packages for co-working spaces and telecom services can help startups manage operational costs.Tax & Capital Management: Partnerships with tax management solutions can streamline tax filing and financial processes for startups.Cloud Services: Discounted access to cloud storage or productivity solutions can be crucial for startups to scale their operations efficiently.Lifestyle: Travel benefits can help founders attend industry conferences or network with potential clients across borders.ICICI Bank’s Partnerships By partnering with a variety of companies, ICICI Bank's iStartup program offers a one-stop shop for startups to access essential services at potentially discounted rates. This can be particularly beneficial for early-stage startups with limited resources.
To Sum it UP When you look at all the factors according to the STARTUP framework, the HDFC startup account does seem to be beneficial for most startups. Again, before committing to a banking solution, it's essential for startups to evaluate their specific business requirements. This includes assessing factors such as transaction volume, international payments, and scalability needs. Moreover, understanding the risk tolerance of the business is paramount. Some startups may prefer stability and security over the potential for higher returns, while others may be more inclined to take calculated risks to maximize growth opportunities. For those looking into banking solutions, the option to open a current account online can streamline the process significantly.
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