Hi Mohit,
It is very simple to understand. As you said your local currency is CAD but you are trying to create a bank account in different currency USD, so no need to tcik "balance in local currency" because USD is not your local currency.
This field is only for that account which is managed in local currency but might be chances to post in foreign currency, so avoiding any exchange rate difference at the time of clearing.
The best example is GRIR account.
Regards,
Kalim