Systematic Investment Plans (SIPs) in mutual funds streamline your investment process. You need to choose a suitable mutual fund, the amount you want to invest and opt for the SIP option. The amount automatically gets debited from your bank account every month on a fixed date, and you receive the mutual fund units in your account. Easy, right?
This automatic deduction is possible because of the One Time Mandate (OTM) in the SIP mode of investing.
What is OTM in mutual funds?
OTM in mutual funds or OTM in SIP refers to the one-time registration process to enable your SIP investments automatically. To allow the auto-deduction of the SIP amount every month from your savings account, you need to register an OTM with the bank.
OTM allows your SIPs to become automated so that you don’t have to transfer the required amount each month manually. OTM in SIP helps ensure you don’t miss out on your investment payments and stick to your goals. Let’s look at the benefits of a one-time mandate in mutual funds.
Benefits of opting for OTM in mutual funds
OTM in mutual funds has clear benefits for investors. A few are discussed below:
- OTM is a one-time process. The time and effort required to register the OTM are minimal. You need to link the savings bank account you wish your SIPs to be deducted from. You can do this online through net banking or offline through a form.
- OTM in mutual funds is a secure facility. You don’t have to worry about your money being at risk or payment defaults. Registering for the OTM with your bank ensures that your SIP payments always go through on time if you have a sufficient balance in your savings account.
- Another benefit of OTM in mutual funds is registering multiple SIPs under one OTM. However, it would be best to keep in mind that the total value of all the SIPs you want to register under a single mandate does not exceed the total limit you have set for that mandate.
- A one-time mandate is a viable solution to reducing your mental load when investing. It helps make the investment process hassle-free and ensures that you never miss on your payments and move closer to your financial goals even with a busy schedule.
How to register OTM in mutual funds?
You can easily register a one-time mandate in your preferred mutual fund SIP online through net banking or by entering your debit card details. Log on to the website of the mutual fund house or any investment platform to start investing.
- Navigate to the profile section and select the ‘autopay’ or the ‘set-up autopay’ option.
- Select the bank and your primary savings account from which you wish the amount to be auto-deducted.
- You will receive an OTP on your registered mobile number. After entering the OTP, you must verify your bank account.
- You can verify your bank account through debit card details or net banking.
- You will be redirected to your bank’s website to confirm the details.
- Once you confirm the OTM details and complete the process, you will be directed back to the mutual fund house’s website.
Investing in mutual funds through SIPs is popular due to the several benefits. Investment automation is a major benefit as it helps inculcate the habit of financial discipline and sticking to your investment strategy. You can opt for it with the one-time mandate option.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.