Benefits of the One-Time Mandate in an SIP

Most people prefer to invest in a Systematic Investment Plan (SIP) online. After selecting the scheme and making the initial payment, the subsequent payments must also be arranged. This is typically done by providing bank details and setting up standing instructions for auto-transferring a specified amount from the savings account to the SIP portfolio on a specific date every month.

However, another convenient option, the One Time Mandate (OTM), deserves a closer look. With OTM, investors can authorise a one-time payment for their SIP investments instead of giving multiple mandates for each instalment.

This facility eliminates the need to remember the due dates for each SIP payment and ensures that the payments are made on time. To set up OTM, investors must provide their bank account details, such as the account number, IFSC code and investment details.

Once the OTM is established, the bank account will be automatically debited for each SIP instalment without requiring a separate mandate. This is particularly useful for investors who have multiple SIPs and find it challenging to manage the payment process for each instalment.

What is an OTM?

A one-Time Mandate (OTM) is a facility provided by mutual fund companies that allow investors to authorise a one-time payment for their Systematic Investment Plan (SIP) investments. This means investors do not have to give multiple mandates for each SIP instalment.

To avail of the OTM facility, investors must provide their bank account details, such as the bank account number and IFSC code, along with the investment details. This information is then used to set up the OTM facility.

Once the OTM is set up, the investor's bank account will be automatically debited for each SIP instalment without a separate mandate.

Investing in Systematic Investment Plans (SIPs) is a popular way to invest in mutual funds. SIPs allow investors to invest small amounts of money regularly, which can lead to significant long-term wealth creation.

While investing in SIPs, investors need to make regular payments, which can be difficult and time-consuming. A one time mandate (OTM) is a facility provided by mutual fund companies that allow investors to authorise a one-time payment for their SIP investments, making the payment process simpler and more convenient.

Benefits of one time mandate in an SIP

Investing in Systematic Investment Plans (SIPs) is a popular way to invest in mutual funds. SIPs allow investors to invest small amounts of money regularly, which can lead to significant long-term wealth creation.

A One Time Mandate (OTM) is a facility provided by mutual fund companies that allow investors to authorise a one-time payment for their SIP investments, making the payment process simpler and more convenient. Below are the benefits of the one-time mandate for an SIP.

Eliminates the need for multiple mandates

With the one time mandate (OTM) facility, investors do not have to give multiple mandates for each SIP instalment. Investors need to provide their bank account details, such as the account number, IFSC code, and investment details, to set up an OTM.

Once the OTM is established, the investor's bank account will be debited automatically for each SIP instalment without requiring a separate mandate. This eliminates the need for investors to remember the due dates for each SIP instalment and ensures that the payments are made on time.

Saves time and effort

The OTM facility can save investors time and effort by simplifying the payment process. Once the OTM is set up, investors do not have to worry about arranging subsequent payments. This frees up their time and effort to focus on other important matters.

Ensures timely payments

An OTM ensures timely payments, which is crucial to achieve an investors' financial goals. Investors can opt for the OTM facility when starting their SIP investments or activate it later by providing the necessary details. However, investors should ensure that their bank account has sufficient funds at each instalment, as non-payment due to insufficient funds can lead to penalties and impact the credit score.

Convenient for investors with multiple SIPs

The OTM facility is handy for investors with multiple SIPs who find it challenging to manage the payment process for each instalment. With an OTM, investors can authorise a one-time payment for all their SIP investments, eliminating the need for multiple mandates and simplifying the payment process.

No need to remember multiple due dates

Remembering the due dates for multiple SIP investments can be challenging, especially for busy investors. With an OTM, investors do not have to worry about remembering the due dates for each SIP instalment. Once the OTM is set up, the payments will be automatically debited from the investor's bank account on the due date, ensuring timely payments.

How To automate your SIPs?

There are two ways to set up a SIP mandate: autopay via OTP and autopay via the form.

Autopay via OTP

Autopay via OTP is the updated version of the biller mandate, offering even more convenience for investors. This option automates the monthly payments for your SIPs, ensuring that they are paid on time without any manual intervention required.

Once you set up AutoPay, your monthly payments will be made automatically, saving you the hassle of making payments manually. This option is quick to set up and completely safe, making it an excellent choice for investors looking to streamline their investment process.

Autopay via form

Another way to give a mandate for automating your SIP payments is through Auto-pay via Form (previously known as OTM). This involves setting up a mandate using a National Automated Clearing House (NACH) form, which enables recurring payments.

Once the mandate is set up, your SIP payments will be processed automatically without further intervention. This process benefits investors who may not have access to net banking facilities or prefer to follow this route for other reasons.

FAQs

What is a One-Time Mandate SIP?

A One-Time Mandate SIP is a feature that allows the recurring mutual fund SIP amount to be automatically debited from the linked bank account.

What are the benefits of an OTM for SIPs?

OTM for SIPs is beneficial as it simplifies SIP payments by eliminating the need to set up a separate mandate for every instalment, helping you automate payments and reducing the chances of missing an SIP.

Is OTM required to start a SIP?

No, OTM is not mandatory to start an SIP in mutual funds. Investors can choose to pay their SIPs manually or opt for other auto-debit options.

What happens if there is not enough money in the bank account for the SIP?

If the linked bank account does not have sufficient funds when the SIP payment is due, the SIP may fail, and your bank may charge a bounce or return fee. The mutual fund company will skip that specific installment without any penalty. If you miss three consecutive installments, it will lead to automatic cancellation of your SIP.

Can I use an OTM for multiple SIPs?

Yes, you can use OTM to automate multiple SIP payments, but just how many SIPs you can set up within OTM depends on the mandate terms and limits set by the bank.

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Disclaimer

The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.