Benefits of a One Time Mandate (OTM) in SIP

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08 min read

Most people prefer to invest in a Systematic Investment Plan (SIP) online. When you invest in a new fund, you will initiate the process by selecting the scheme and making the first payment towards the chosen scheme. Voila, that was easy! How about the subsequent payments?

You will also have to arrange for the subsequent payments at the time of opening a new SIP. Usually, investors provide their bank details and set standing instructions such that the specified amount will be auto-transferred from your savings account to the SIP portfolio on a set date every month. 

One Time Mandate (OTM) is one of the convenient ways of investing. Let us explore OTM in detail.

What is OTM?

A One Time Mandate (OTM) refers to a one-time registration process where you instruct the bank to deduct a certain amount from your savings account at regular intervals to be credited into your SIP portfolio. Once you successfully register for OTM, the money transfer will be automated, and you don’t have to worry about transferring money now and then.

Why should you choose OTM?

Choosing OTM will ensure that you don’t miss out on contributing to the SIP portfolio every month. Here is a list of reasons why you should choose OTM:

  • Just register for the service once and done. The money transfer activity will be carried out automatically regularly.
  • Simple registration steps.
  • The money transfer will be done securely, and there are minimal chances of a payment failure.
  • No cap on the number of SIPs you can register under a single OTM. However, make sure that the aggregate value of all the SIPs is well within the specified limits.
  • Automating money transfer will instil discipline towards achieving your goals.

What transactions can be done through the OTM facility?

  1. Fresh Lump-Sum Investments
    Make payments towards your investments through your bank account as per the OTM form’s fixed limit.

  2. New SIPs
    Initiate new SIPs through the OTM service without having to submit the bank details or cancelled cheque.

How to register for the OTM facility?

You are required to register once per folio by filling and submitting the properly signed OTM Form. The signature must be as per the bank documents. 

Details, such as bank account number, bank and branch name, IFSC and/or MICR code, the daily limit of the amount, folio number or application number, signature, and contact details, should be filled in the form. 

Make sure that there is no overwriting in the form to avoid rejection.

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