One Time Mandate (OTM) for Easy SIP Investing in Mutual Funds

OTM in mutual funds is a super convenient way to set up Systematic Investment Plans (SIPs). Think of it like a standing instruction you give your bank to automatically transfer money towards your SIP, so you don't have to worry about remembering dates or making manual payments every month.

What it is?

OTM stands for One Time Mandate. It's a one-time registration process with your bank that allows them to deduct money from your account for your SIP investments.

How does it work?

• Registration: You'll need to provide your bank details, investor information, mandate specifications (amount limit and validity period), and portfolio details (folio number) to your bank.
• SIP setup: Once registered, you can easily set up new SIPs or make lump-sum investments using OTM within the specified limit. No need to submit bank details again!
• Auto-payments: Your bank will automatically transfer the SIP amount from your account on the chosen date, ensuring your investments happen smoothly.

What do you need to register?

Here’s what you need to register:

1. Account details: Provide your bank account number, bank name, branch, account type, and IFSC code. Only one bank account can be registered for OTM.
2. Investor data:  Submit personal information like name, PAN number, address, email, and mobile number. If the account is held jointly, details of other account holders are needed.
3. Mandate specifications: Specify the upper limit for transactions and the validity period for the OTM. You can choose a specific timeframe or select the default period.
4. Portfolio details: Include investment details such as folio number, application number, and the name of the asset management company.
5. Signature: Ensure that signatures match those registered with the bank account.

When registering online, a nominal Re. 1 payment transaction validates the bank account, ensuring the applicant's authorization.

What’s covered under OTM in mutual fund investments?

It covers two types of payments:

• New lump-sum payments: Investors can make one-time payments for lump-sum investments within the OTM's maximum limit.
• New SIPs: Initiate new SIP investments without having to provide bank details or a cancelled cheque again.

Benefits

• Convenience: you only need to set up your SIP payments once, then sit back and relax. No more remembering dates or logging into your bank account every month.
• Time-saving: By automating your SIP payments, it frees up your time from difficult paperwork and banking tasks. Instead, you can focus on things that matter to you, whether it's work, family, or hobbies.
• Flexibility: Even though your SIP payments are automated, you still have control. You can adjust the amount you invest or pause payments whenever you need to. This gives you the freedom to manage your investments according to your financial situation.
• Lower transaction costs: They can help you save money by reducing the fees associated with manual transactions. By streamlining your payments, you minimize the charges put by banks or financial institutions.
• Improved cash flow management: With OTM, you can align your SIP payments with your income schedule. This helps you better manage your finances by ensuring that you always have enough money for both your investments and daily expenses.