When investing in mutual funds through SIP (Systematic Investment Plans) online, you are required to choose the fund and then make your first investment through any digital mode. Once you make your first contribution towards SIP investment, you must make a provision for subsequent fund contributions. This provision can be addressed by the term OTM (One Time Mandate) wherein you authorize your bank to automatically debit the fund on the request of the authorized mutual fund. This OTM facility is one of the easiest ways of investing in mutual funds through SIP.
Check out what this mandate is and what are the crucial benefits attached to it!
What is OTM?
OTM refers to one-time registration via which you can instruct your bank to automatically deduct a predetermined amount from your bank account at a predefined time towards your SIP investment. However, this one-time process takes up 10 days to get registered. But once registered, you will not have to follow any payment process for timely SIP investment.
OTM registration process details
The OTM registration process is simple and straightforward. You are just required to submit the below mentioned details on your OTM registration form for a successful registration.
- Bank details: This involves your name and your bank branch name where your bank account is. Also, you will need to give your IFSC code.
- Bank account details: This involves your savings bank account number. You can select just one account per registration form.
- Personal information: This involves your name, contact details and your signature.
- Upper limit: You require mentioning an upper limit, which can be automatically transferred through the mandate. Note that the figure can be more than your contribution towards SIP/lump sum payments.
- Investment information: You require providing the folio number as well as the debit amount option, both maximum and fixed. The latter option is for SIP investments while the former is best matched for lump sum payments. Also, you require mentioning the frequency i.e. weekly, monthly, half yearly etc. Former option endows you with the flexibility to initiate the fund deduction as per your convenience. Note that you can select just one debit option i.e. either maximum or fixed and not both.
Crucial benefits of adding OTM in SIPs
To make sure that your SIP continues nonstop, it is crucial for you to opt for the OTM option. Selecting OTM route caters the following advantages:
- Firstly, it requires one-time effort i.e. post successful registration, the fund transfer takes place automatically.
- Secondly, registration is very easy and can be completed in a few steps.
- Thirdly, it is completely safe with extremely meagre chances of payment failure.
- Fourthly, there is no restriction on the number of SIP investments that can be registered under a single OTM. However, ensure that the aggregate SIPs value registered does not surpass the specified mandate limit.
- Lastly, it automates SIP investment, which helps ensure disciplined and regular investment towards achievement of your financial goals.
OTM is one of the most reliable and safest mediums of investing in SIP mutual funds. Opting for this mandate relieves you from the stress and burden of transferring investible funds manually towards your SIP portfolio.