Most investors choose a Systematic Investment Plan (SIP) because it is more affordable and minimizes the impact of market volatility. Additionally, it provides high returns irrespective of the condition in the market. When investors open a new SIP, they must provide their bank details and set standing instructions for subsequent payments. In this way, a specific amount gets auto-transferred from the bank account every month on a particular date. Read on to learn about the details of One Time Mandate in SIP.
What Is One Time Mandate (OTM) in SIP?
One Time Mandate is a one-time registration procedure for auto payments. It is a convenient option because the investor doesn’t have to transfer the money manually anymore while SIP investment. A person must instruct the bank to debit a specified amount of money from their savings account and credit the same to the mutual fund scheme at periodic intervals.
Benefits of Adding OTM to SIP
If you don’t want to miss making monthly payments toward your mutual fund investments, you should opt for One Time Mandate. In addition, you can get the following benefits:
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Hassle-free registration process
For OTM registration, all you need to do is submit an OTM form with your signature. A financial institution usually takes 10-15 working days to complete the registration process.
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Security
This is a safe, secure, and fast investment mode. You should provide your bank account and mutual fund-related information only once. Your time will not be wasted repeating the formalities.
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No limits on the number of SIP instalments
You can automate multiple SIP payments with a single OTM registration. There is no limit on the number of SIP instalments you can register under a One Time Mandate. However, you need to ensure that the net value of all SIPs combined falls under the specified limit.
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Financial discipline
Automated payments at pre-set periodic intervals instill financial discipline in investors. This process, in turn, helps in financial success.
How to Automate SIP?
You can automate your SIP via the popular auto-debit instrument — One Time Mandate. Nearly every bank offers OTM services. You can set up auto-pay services both via OTP and Form.
Setting up Auto-pay via OTP:
Following are the steps to set up auto-pay with OTP:
Step 1: Open your bank’s online account
Step 2: Select the ‘set up auto-pay option and click on the ‘continue’ button.
Step 3: Provide the OTP you receive on your registered mobile number in the designated space.
Step 4: On the redirected page, verify your bank account details. Use either net banking or debit card details.
Step 5: You will be redirected to a page where you should provide the required details for completing the login and verification procedures.
Step 6: On the redirected page, confirm the details and choose ‘secure login.’
Step 7: After the confirmation, you will receive the necessary details like reference ID, acceptance reference number etc. Save the information for future reference.
What Transactions Can Be Carried Out Via the OTM Facility?
You can do the following transactions through the OTM facility:
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New SIPs
You can easily initiate new SIPs through the OTM service. You don’t have to submit a cancelled cheque or bank details.
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Fresh lump sum investments
You can use your bank account to make fresh payments for your investments based on the prescribed OTM limit of the bank.
How to Register for the OTM facility?
Follow these steps to register for the OTM facility:
Step 1: You need to fill out the OTM form correctly.
Step 2: Provide your personal information, including contact details, information about the account holders of the linked bank accounts and signatures of all the account holders.
Step 3: Provide every bank detail, including its name, bank branch information, and IFSC.
Step 4: Enter the details of the bank account. You need to provide the bank account number and the type of bank account.
Step 5: Provide your investment details, including the investment folio number.
Step 6: Choose the OTM tenure and payment frequency. It can be monthly, quarterly, half-yearly, or as set by you. Remember that the fixed option is ideal for SIPs.
Step 7: Submit the form to the financial institution.
How can you set up One Time Mandate on Kuvera
Step 1: Download the Kuvera app or visit our website and sign up.
Step 2: Complete your KYC with PAN, Aadhaar, and In-person verification through video. It is mandatory to complete KYC compliance under the Prevention of Money Laundering Act, 2002 and Rules framed there under, read with the SEBI Master Circular on Anti Money Laundering (AML) Standards/ Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries.
Step 3: Select the ‘Invest’ option from “ Home”
Step 4: Select ‘Mutual Funds’, and see the categories listed, or check All Mutual Funds
Step 5: You will be directed to a list of all mutual funds available in Kuvera. By clicking on every mutual fund scheme, you can check its risk profile, net asset value, and past performance. In this section, we have included the performances of its counterparts to help you compare. To be sure, check the exit load and lock-in periods of the mutual fund. This will help you decide if you are ready for a commitment of the mentioned years.
Step 6: Select the MF scheme you want to invest in, and tap on SIP investment. Enter the amount on the next screen and tap on “Buy now”, or “Add to cart”.
Step 7: Under the payment option, you will find, ‘Mandate’. You can select that.
Step 8: You will be redirected to your bank account. Complete all the formalities and approve the process with your authorized signature.
Step 9: The first instalment will be deducted immediately, and the next instalment will be deducted based on the SIP date (Please note that the next instalments are deducted after around 30 days).
Step 10: The next step is to approve a mandate of Rs 1 lakh for the deduction of SIPs. The mandate is approved by the bank for the next instalments of SIPs, and it normally takes 3-4 days for approval. The amount of money will be deducted only based on the instructions you provide in your SIP. For example, if you have registered for Rs 30,000 through SIP, only that much will be deducted. If your daily SIPs exceed 1 lakh, you can choose to setup the SIPs for a different date.
How to Setup e-Mandate for SIP?
If your fund house allows it, you can set up an e-Mandate for SIP. Below are the steps to do so:
Step 1: Make a plan for monthly SIP. Use an online SIP calculator if needed.
Step 2: Visit the website of the fund house. Select a fund and start a SIP.
Step 3: Choose the OTM e-mandate option for the registration of auto-payments. In all probability, you will be redirected to a payment gateway for making a transaction of a small amount. It will verify your savings account and create an OTM.
Step 4: The Asset Management Company might also ask for a NACH form that you fill out. In that case, you must complete and submit a NACH form and a cancelled cheque.
Final Word
To summaries, One Time Mandate in SIP is a secure investment option. It has many benefits as well. You can easily set up auto-payments with OTP or by filling out a NACH form. If you opt for SIP, choose OTM as it would save you valuable time.
Pro tip: Start investing through a platform that brings goal planning and investing to your fingertips. Visit kuvera.in to discover Direct Plans and Fixed Deposits and start investing today.
Frequently Asked Questions
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Do I need to have an account with a specific bank to avail the OTM facility?
No, there is no such rule. Investors can enroll for OTM facility in any bank that is a part of the NACH system.
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What is the applicable NAV for payment made through OTM?
According to SEBI regulations, transactions made through the OTM mode will be treated similarly to similar transactions carried out via other modes.
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What is the validity period for NACH?
NACH has a validity period till 31/12/2099.
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