What is One Time Mandate(OTM) in Mutual Fund SIP and Its Benefits

Better protection against market volatility, affordability, and high earnings even during market lows are some of the major reasons investors choose to invest in Systematic Investment Plans (SIPs). However, selecting the desired scheme and making the first payment is easy, but your work isn't done there, that is until you opt for a One-Time Mandate or OTM.

Essentially, this is an auto-pay option for an SIP through an eNACH mandate.

An OTM in SIP investing is a one-time registration process in which you instruct your bank to deduct a specific amount from your savings account and credit the same to your SIP portfolio at regular intervals.

Once the OTM has been activated, your monthly SIP payments will be automated, relieving you of the task of transferring money ever so often.

What is One Time Mandate (OTM) in Mutual Fund SIP?

An OTM in SIP investing is a one-time registration process in which you instruct your bank to deduct a specific amount from your savings account and credit the same to your SIP portfolio at regular intervals. Once the OTM has been activated, your monthly SIP payments will be automated, relieving you of the task of transferring money ever so often.

Benefits of Choosing OTM in Mutual Funds

Choosing the One-Time Mandate (OTM) for mutual funds offers several advantages that simplify and streamline investments.

1. Simple and Convenient Payments

OTM allows direct payments from a bank account without the need to enter details repeatedly. This reduces manual effort and avoids delays in transactions.

2. Quick SIP Setup

Investors can start new SIPs without submitting bank details or physical documents each time, making the process smoother and faster.

3. Saves Time with Automation

By automating payments, OTM reduces the need for approvals and manual intervention, saving time and effort for investors.

4. Higher Security

With OTM, investors provide their bank details only once, reducing the risk of data exposure and making transactions safer.

5. Easy Registration Process

The OTM registration process is simple and does not involve complex steps, making it accessible even for first-time investors.

6. Less Paperwork

Investors can complete multiple transactions without submitting the same documents again. This not only reduces paperwork but also supports a more efficient investment process.

7. Seamless Management of Multiple Investments

OTM allows investors to manage various mutual fund transactions from a single platform, bringing better organisation and control over investments.

Additional Read: Timed lump sums vs SIPs: What works better?

How to Set up E-mandate for SIP

Download the Tata Capital Moneyfy app

Enter your details – PAN, email id, etc. – and choose your bank

Next, choose the mandate amount and the period for which you want it to be valid

Now, authenticate your Aadhaar details

It will take a couple of working days for the e-mandate to become effective.

How OTM in SIP works?

Here's how the one-time mandate works in SIP-

1. Use a SIP calculator to determine your investment amount, investment return, and expected returns based on your investment goals.

2. Compare different SIPs based on your calculations and choose the best SIP plans for your investment.

3. Set up the OTM facility with your bank by specifying the SIP investment amount and the desired investment frequency. The specified amount will be deducted automatically from your account.

What Transactions Can Be Done Through the OTM Facility?

Below are some transactions that can be done through the OTM facility-

Regular SIP Investments – It allows automatic investments in mutual funds at fixed intervals, making systematic investment plans (SIPs) hassle-free.

One-Time Lump Sum Investments – Some platforms support OTM for making larger, single-time investments without manual intervention.

Systematic Transfers (STPs) – You can use it to move funds regularly between different mutual fund schemes.

Automated Withdrawals (SWPs) – If you need periodic payouts, OTM enables automatic withdrawals from your mutual fund investments.

Top-up SIPs – OTM can also adjust your SIP contributions at set intervals, helping you invest more over time without additional effort.

How to Automate an SIP?

Setting up an SIP with OTM is simple. After registration, investors select the amount and frequency for their investments. The OTM system then deducts the chosen amount automatically on the scheduled dates, allowing hassle-free contributions.

In conclusion

The one-time mandate facility offers a disciplined approach to investing in mutual funds through SIPs. With OTM, you can ensure consistent investing towards your financial goals through automatic money deductions, thus streamlining your investments.

Do you also want to start your SIP investment journey? Download Tata Capital's SIP app and get the ball rolling! Use the SIP calculator to determine the amount you'll need to invest to achieve your goals, get personalised fund recommendations for your portfolio, compare between funds, and start your SIP journey with as little as Rs.500.

Frequently Asked Questions(FAQs)

What is a one-time mandate for SIP?

A one-time mandate (OTM) for SIP is an authorisation that allows automatic debits from your bank account for future SIP payments, streamlining investments without needing approval for every transaction.

Is one-time SIP better?

One-time SIP can be better if you have a larger sum to invest and want to capitalise on a market uptrend. However, monthly SIPs offer the advantage of rupee cost averaging, reducing risk by spreading out investments over time. However, whether it's "better" depends on individual financial goals, liquidity preferences, and market conditions.

Which is better, OTM or Biller, for SIP?

OTM is often preferred for its convenience and faster setup. Billers, however, may offer more control over individual payments. Choosing depends on ease of use versus flexibility.

Are OTM options more profitable?

OTM options don't impact profitability; they are purely a method of automating payments. SIP returns depend on market performance and fund selection, not on the payment mechanism used.

What is OTM full form in Mutual Funds?

In mutual funds, OTM stands for One-Time Mandate. It allows investors to automate their SIP payments by authorising a one-time bank mandate, enabling automatic deductions on scheduled dates.