OTM in Mutual Funds

What is OTM?

OTM full form is ‘One Time Mandate’ – It is a one-time registration process to be done by the mutual fund investor wherein the investor authorizes his/her banker to execute debits to his bank account up to a certain limit based on requests received from the mutual fund company. The Asset Management Company or registrar shall forward the debit request to the bank based on the transaction request made by the investor for a lump sum or SIP purchase in a mutual fund scheme. The debits happens through NACH, the full form of which is National Automated Clearing House.

Investing in Mutual Funds can be simple, quick and efficient, especially if it is done online by investors. When the investor has decided the fund to be invested in, the rest of the process is only a matter of a few clicks. In order to make it easier, OTM in mutual fund comes into the picture.

How can the investor register OTM?

We discussed OTM meaning. Let us understand how the investor can register OTM.

  1. Bank account details - An investor can give the details of only one bank account in one OTM- the bank name, account number, the account type along with the IFSC code has to be mentioned.
  2. Personal details - In this section, an investor provides his/her name, PAN number, address, email and mobile number as well as the details of other account holders if they are in joint or either or survivor basis holding.
  3. Upper limit - Here, you need to mention the upper limit that you will allow to be transferred through OTM. Please note that your mutual fund transaction will go through only if the investment amount is within the upper limit.
  4. Investment Details – You need to provide the folio number or application number and the asset management company name.
  5. Period of OTM – You must mention the period – From and to month/year. You can also tick the default period which is December 2099. You may also choose the option ‘until cancelled’.
  6. Signature – Once you have filled in the above details in OTM form, you have to sign the form along with the other holders, if any, in your bank account. Please note that the signature on the OTM form should match with the one registered in your bank account.

Advantages of OTM in Mutual Fund

  1. The first and most obvious benefit of OTM in mutual fund is that it makes mutual fund investments hassle free, by taking a one-time consent from investors and then automating their investments for the given time frame.
  2. The investor needs to register for the service once, post which the required money transfers are done automatically and regularly. If you have an OTM mandate, you need not necessarily use net banking.
  3. Investor’s funds are realized on the day of transaction, therefore, the chances of unit allotment on the same day is very high.
  4. This ensures that you as an investor continue the process of investing in SIP or lumpsum in a disciplined manner, without any hiccups.
  5. One can register for multiple SIPs under a single OTM, while making sure that the aggregate value of the registered SIP should not exceed the specified mandate limit.

Frequently Asked Questions (FAQ) - OTM

Reduction in registration time compared to ECS which is around 30 days. It facilitates future payments without any instrument (cheque or demand draft)

Yes, an OTM can be registered by individual as well as corporate.

Yes, it can be. The option is provided in the OTM form.

Yes it can, if you provide incorrect details. It can also get rejected if your bank is not participating in NACH.

There is no limit for this except that the total amount of your various SIPs should not exceed the maximum limit amount for the OTM.

Yes, you can register multiple bank OTM in a single folio. You have to submit separate OTM forms for each of the banks.

Any transaction under OTM facility will be treated at par with similar transactions received through any other mode as per the SEBI Regulations on allotment of NAV.

No, there is no need of cancelled cheque each time when SIP is registered as you have already submitted the cancelled cheque along with the mandate form.

Both, SIP and lump sum transaction can be initiated by using the OTM. You only need to keep the daily total transaction amount within the upper limit applied in the OTM.

We discussed OTM meaning in mutual funds, what is OTM, how you can register an OTM and its benefits. As a mutual fund investor, you must have an OTM with the AMC you are investing with as it provides a seamless experience in making payments to the mutual fund house for your lump sum and SIP investments.

An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund.
For information on one-time KYC (Know Your Customer) process, Registered Mutual Funds and procedure to lodge a complaint in case of any grievance Click Here.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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