OTM in Mutual Funds: Full Form, Benefits, Registration Guide & More
OTM or a one-time registration process that authorises your bank to deduct a set amount from your savings account towards purchasing units in a particular scheme of a mutual fund.
Investors place transaction requests with the asset management company, which in turn makes debits from your bank. You can set this mandate for a fixed timespan or it can remain active until you cancel it.
The OTM facility helps you automate your mutual funds journey, is paperless and digital, eliminating the hassle of physical cheques or remembering your banking details. This is what ultimately makes it one of the go-to ways to invest in mutual funds and build wealth over time.
How to register for OTM?
Registering for the one-time mandate(OTM) is a simple process. All you need to do is fill out the OTM form and correctly provide your personal and financial details. Here are the details you will need to mention to register for OTM:
1. Bank Account Details: Your bank name and branch, bank account number, bank account type, IFSC code, etc.
(The OTM must be registered using a single bank account)
2. Personal Details: Your name, date of birth, PAN number, address, phone number, e-mail ID, etc.
(In case you have a joint bank account, you need to provide the details of other account holders as well)
3. Mandate Limit: The maximum amount that can be debited through this platform. If any transaction exceeds the mandated limit, it will be rejected.
4. Investment Details: Your folio number and choice between two debit options: fixed amount, which is perfect for regular investments like SIP, or maximum amount for one-time lumpsum payments. You can also set the frequency of the debits for your funds, i.e. monthly, quarterly, half-yearly, or as needed.
5. Signature: All bank account holders need to sign the OTM form. The signatures in the OTM form must match with the signatures available in the bank records.
Once the form is submitted, the bank will process your request. Upon validation, you will be able to use the OTM facility to make investments in mutual funds.
What are the benefits of OTM?
• Simple registration process, which can be done in a few easy steps
• One-time process with no follow-up procedures
• Works for both lumpsum and SIP transactions
• No limit to the number of SIPs you can register under a single OTM.
• Automates money transfer and instills discipline in your investments
• Ensures increased safety in transactions
• Ensures lesser chances of transaction failure
Transactions covered under OTM
Fresh Lump-Sum Investments: The payment will be processed according to the fixed limit mentioned in the OTM form.
New SIPs: It is a smooth and convenient process as you need not resubmit your bank details or canceled cheque.
What is OTM in simple words?
OTM, or One Time Mandate, is an authorization given by an investor to their bank, allowing mutual fund companies to debit their bank account up to a certain limit for future transactions without needing repeated approvals.
How does OTM work?
Once set up, OTM enables automatic debiting of the investor's bank account for transactions like SIP (Systematic Investment Plans) or lump sum investments, as per the specified frequency and limit.
What are the benefits of using OTM?
Investors consider OTM for its convenience, efficiency and automation.
Is there a limit to the amount that can be debited through OTM?
Yes, this limit is determined by the investor when he/she sets a maximum limit when registering the OTM. This limit can be later adjusted based on one's' investment goals.
How do I set up an OTM?
You can set up an OTM by filling out the OTM form provided by your mutual fund company and submitting it to your bank. Some banks may require a verification through a physical or electronic mandate.
Can I cancel or modify my OTM?
Yes, you can cancel or modify your OTM by submitting a request to your mutual fund company or directly to your bank.
Is OTM secure?
Yes, as it involves authorization and verification by both the bank and the mutual fund company.
Are there any charges for setting up an OTM?
Setting up an OTM generally happens free of cost. However, it is advised to confirm with your bank or mutual fund company for any specific fees.
What happens if there are insufficient funds in my account for an OTM transaction?
If there are insufficient funds, your mutual fund investment might not be processed.
Additionally, you might incur charges for insufficient funds from your bank.
Can I set up multiple OTMs for different mutual fund companies?
Yes, you can set up multiple OTMs with different mutual fund companies, each with its own specified limit.
How long does it take for an OTM to become active?
The activation of an OTM usually takes a few days to a couple of weeks, depending on the bank and mutual fund company.
Do I need to renew my OTM periodically?
OTM typically remains active until you choose to cancel it.