Are you tired of issuing cheques each time you initiate a mutual fund SIP?
Wondering how to automate the whole process? Try issuing a ‘Bank Mandate Form’. A bank mandate is the latest way to streamline your mutual fund SIPs. It makes the entire process a lot less procedural and investing becomes convenient and fun.
1. Bank Mandate Form and Mutual Funds: An Overview
In a bank mandate, you authorize a third party to debit a specific sum from your bank account at a regular interval.
By submitting a mandate form, you authorize your bank to conduct an auto-debit transaction. In this transaction, a certain amount is debited from your savings account on particular dates. Such an amount is then invested by way of SIPs in the given mutual fund schemes.
Hence, bank mandates facilitate investments in the most hassle-free, paperless and convenient manner.
2. When Are Bank Mandate Forms Necessary
As you know, under the SIP arrangement, a certain amount is invested in mutual fund schemes on particular due dates. The invested amount has to be regularly auto-debited from the given savings account.
To perform such an auto-debit of a fixed amount, you need to authorize the concerned bank branch. Thus, it becomes mandatory to issue a bank mandate to authorize your bank for the SIP payment to be initiated.
3. Submitting a Bank Mandate Form
In case of mutual fund investments, it is the investor who is required to issue a bank mandate.
If you want to start an SIP in a mutual fund scheme of your choice, you will be responsible for submitting a bank mandate. You will have to fill a simple form and send it to your bank branch where you have a savings account.
Once you issue a bank mandate, it authorizes the particular asset management company (AMC) to direct a fixed sum of money from your account to the specific mutual fund scheme.
4. The process of Issuing a Bank Mandate Form
You can simply download the bank mandate form from the designated website. Just fill in the details, sign, and send it back to your AMC. The AMC will send it to your bank branch on your behalf to get an authorization.
Once the bank completes the authorization process, your SIP will be initiated automatically. You will receive updates regarding the progress of the authorization process.
5. Benefits of a Bank Mandate Form
Bank mandate is a one-time registration process. It allows you to initiate mutual fund SIPs in a less cumbersome manner.
Once you issue a bank mandate, you will never have to issue individual cheques to the AMC repeatedly. All kinds of monetary transactions in your folio will take place on the basis of the instructions given in the bank mandate.
As the interactions take place between your bank and AMC, you can be assured of the safety of the transactions. You will not be required to go through the same formalities over and over again.
6. Authorizing the Debit Mandate for SIP
After the investment is made, the investor needs to download the debit mandate. This form is then to be signed, and sent to the bank via courier, within 21 days from the date of making the investment. It can take anywhere from a month to 40 days for the authorization process to be completed. The SIP will start once the authorization is done.
7. SIP Instalment Schedule
After the bank approves the debit mandate, the SIP installments will be automatically debited on your chosen SIP dates, immediately post-approval. For example – if you have selected the 7th of every month as your SIP date, but your mandate is approved on the 25th of the month, then the 7th of the next month will be your first debit. This will be continued on the 7th of every succeeding month.
8. The process of Auto-Debit of SIP
When the SIP date arrives, a debit request is sent to your bank. The bank will process your request (subject to availability of funds in your account) and then forward the money to the respective fund house. After receiving the debit confirmation from the bank, the mutual fund house will invest that amount in units of the desired scheme and the same will reflect on your investment dashboard. The debit mandate thus has an important role to play in your SIP investments, by helping you invest in mutual funds in a convenient and hassle-free manner.