OTM in Mutual Funds

One-Time Mandate or OTM in mutual funds is a one-time authorization that banks receive from investors to debit their account automatically when an investment payment is due. Once the OTM is activated, the fund house or platform can withdraw a defined amount of money through an eNACH mandate to auto-pay for Systematic Investment Plans (SIPs). This facility eliminates the need for you to manually approve each transaction.

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.

How to Set up an E-mandate for SIP?

1. Download the Tata Capital Moneyfy app.
2. Enter your details – PAN, email ID, etc. – and choose your bank.
3. Next, choose the mandate amount and the period for which you want it to be valid.
4. Now, authenticate your Aadhaar details.
5. It will take a couple of working days for the e-mandate to become effective.

How Does OTM in SIP work?

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.

Key Features of OTM

OTM aims to simplify your investment journey. Once you’ve learned what OTM is in a mutual fund, you must understand its features.

1. One-time action: You just need to authorize OTM once, and it continues to function for as long as you want it to.
2. Gives you full control: You decide the investment amount, frequency (monthly, quarterly, biannually, annually), and time period. You can also adjust the maximum debit limit as per your preference.
3. Can be changed any time: If you need to adjust the SIP amount or pause it temporarily due to changes in your financial plans, you can do so without any challenges.
4. Works across fund houses: There is no need to authorize OTM repeatedly with every fund house. You can link the same to several mutual fund schemes.

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 in mutual funds allows investors to manage various transactions from a single platform, bringing better organization and control over investments.

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

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 them 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.

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 personalized fund recommendations for your portfolio, compare between funds, and start your SIP journey with as little as Rs. 500.