What is One Time Mandate (OTM) in Mutual Funds?

With digital advancements, investing in mutual funds is now super easy. Whether you choose a Systematic Investment Plan (SIP) or a lump sum investment, making payments on time is important. However, remembering to pay every month can be difficult. It is time-consuming and may lead to missed investments.

This is where One Time Mandate (OTM) helps. It automates your payments, ensuring your investments happen on time with no manual effort.

But how exactly does One Time Mandate (OTM) work? What are its benefits? Read on to understand in depth.

What is One Time Mandate (OTM) in Mutual Funds?

One Time Mandate (OTM) is a pre-approved instruction to your bank for automatic payments. It ensures your SIP or lump sum investments happen on time without manual effort. With OTM, you don’t need to approve payments every month. Once set up, your bank will auto-debit the specified amount on the scheduled date. This makes investing easier, faster and more disciplined.

OTM in mutual funds is very useful for:

• SIPs (Systematic Investment Plans)
• Lump sum mutual fund investments
• Other recurring payments like insurance premiums and subscriptions

What is Mandate in Mutual Funds?

A mandate in mutual funds is an instruction given by an investor to their bank that allows automatic debits for mutual fund transactions. One Time Mandate (OTM) is one such authorisation that makes investing smooth and hassle-free.

How is OTM Different from a Recurring Mandate?

Both OTM in mutual funds and recurring mandates automate payments but there’s a key difference:

• One Time Mandate (OTM): Authorises automatic payments for a set period or number of transactions. Once it expires, you need to renew it.
• Recurring Mandate: Allows continuous payments without an expiry date until you cancel it.

For mutual funds, OTM is preferred as it offers better control over investments.

What is Mandate Amount in SIP?

It refers to the fixed amount an investor agrees to invest regularly through an SIP. This sum is auto-debited from the investor’s bank account at scheduled intervals.

For example, if you set up an SIP of ₹10,000 per month, your bank will automatically deduct ₹10,000 and invest it in the selected mutual fund on the chosen date. This removes the need for manual payments.

How OTM is Beneficial in Mutual Funds?

OTM offers many advantages to an investor and some of them are listed below:

• Convenience – There is no need to remember or track payment dates and approve transactions manually.
• Automation – It ensures regular SIP investments, making wealth-building effortless.
• Time-Saving – OTM helps in reducing paperwork and eliminates repeated authorisations.
• Avoids Missed Payments – It make sure investments happen on time, helping maintain financial discipline.
• Transparency – It allows easy tracking of all mandates and investments.

What is the Maximum Mandate Amount Meaning?

It refers to the highest limit an investor can set for automated transactions. Banks or payment platforms decide this based on regulations.

For example, if a bank allows a maximum mandate amount of ₹1 lakh per transaction, you cannot authorise payments beyond this limit. You can change the amount above that if there is any revision in the regulations.

How to Set Up a One Time Mandate (OTM) for Mutual Funds?

Setting up OTM in mutual funds is simple and can be done through authorised online investing platforms or apps. You can also track and modify your One Time Mandate (OTM) through these portals.

Here’s how:

• Choose Your Mutual Fund Scheme – Select the fund you want to invest in
• Decide the Investment Amount – Choose the SIP or lump sum amount
• Fill the OTM Form – Enter details like bank account and investment frequency
• Authenticate the Mandate – Verify with an OTP or bank transaction
• Receive Confirmation – Once approved, your One Time Mandate (OTM) is activated and payments will happen automatically

One Time Mandate (OTM) in mutual funds makes investing easy, automated and hassle-free. This feature ensures timely investments without manual intervention and any misses.

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FAQs on OTM in Mutual Funds

Is One Time Mandate in mutual funds available for all?

Yes, OTM in mutual funds is available to most investors. However, they must have a linked bank account, KYC completed and make sure their bank supports One Time Mandate (OTM) payments.

Can the One Time Mandate be modified?

Yes, you can change the investment amount, frequency or bank details through your mutual fund platform or by contacting your bank. Some apps also allow direct modifications.

Who is eligible to avail of the One Time Mandate facility?

All individual investors can utilise the One Time Mandate facility if they meet the following criteria:

• Has completed KYC verification
• Holds a bank account that supports OTM
• Invests through a mutual fund platform that offers OTM