OTM in Mutual Funds

OTM stands for One Time Mandate. It's a simple one-time registration. Investors use it to give their bank permission to take money from their account for SIP, which means Systematic Investment Plan.
OTM in Mutual Funds
4 mins read
02-June-2024

The acronym OTM stands for "One Time Mandate," representing a single registration procedure for mutual fund investors. Through this process, investors grant their bank authorisation to execute debits from their account, up to a specified limit, as per requests made by the mutual fund company.

Simplicity and efficiency are very important when it comes to investing in today’s tech-friendly environment. Enter the ‘One Time Mandate (OTM)’ for systematic investment plans (SIPs)—a revolutionary feature designed to enhance convenience and bring a seamless experience to investors.

What is OTM

The One Time Mandate (OTM) is a ground-breaking feature that allows investors to automate their SIP transactions through a single, one-time registration. It eliminates the need for repetitive, manual interventions, making the investment journey smoother.

How does OTM work?

Let's see how a one-time mandate (OTM) simplifies investing in mutual funds through a real-life scenario.

Imagine you're looking to build long-term wealth through a mutual fund. You choose a Systematic Investment Plan (SIP) in an equity-oriented fund to invest Rs. 5,000 monthly for 10 years. To ensure consistent contributions and avoid missing payments, you decide to set up an OTM online.

Here's how it works:

  1. Setting up the OTM: You access your mutual fund investment platform and initiate an OTM for your chosen SIP. You instruct your bank to automatically transfer Rs. 5,000 from your account to the equity fund on the 1st of every month for 10 years, totaling 120 automated payments.
  2. Automated SIP contributions: Once registered, your bank will automatically debit Rs. 5,000 from your account on the 1st of each month and deposit it into your designated SIP account. This ensures a disciplined and hassle-free investment approach.
  3. Maintaining sufficient funds: It's important to remember that these automated debits rely on sufficient funds in your bank account. If your balance falls below Rs. 5,000 on the designated date, the OTM may fail, potentially incurring penalties from your bank. Therefore, maintaining adequate funds in your account on the payment date is crucial.

This example demonstrates how OTM streamlines SIP investments, ensuring consistent contributions towards your long-term financial goals.

Benefits of choosing OTM in mutual funds

Opting for OTM presents a multitude of advantages.

  1. Convenience and simplification: OTM streamlines the investment process by allowing investors to make payments seamlessly through their bank accounts without the hassle of repeated manual submissions.
  2. Efficient SIP setup: Investors opting for SIPs can initiate new plans effortlessly using the OTM facility, bypassing the need for providing bank details or submitting physical documents.
  3. Time-saving automation: OTM automates the investment experience, reducing the time and effort required for transaction-related formalities, making it an efficient choice for those seeking a hassle-free investing journey.
  4. Enhanced security: By registering for the OTM facility, investors enhance the security of their transactions, as it minimises the need for sharing sensitive information repeatedly, reducing the risk associated with manual intervention.
  5. Streamlined registration process: Investors enjoy a straightforward registration process for the OTM facility, making it user-friendly and accessible, even for those new to online investment platforms.
  6. Reduced documentation requirements: Choosing OTM translates to a reduction in paperwork, as investors can perform various transactions without the need for repetitive document submissions, contributing to a more eco-friendly and efficient investment process.
  7. Seamless management of multiple investments: OTM facilitates the efficient management of multiple investments, allowing investors to handle various mutual fund transactions through a unified and simplified platform.

Did you know? You can also get an estimate of the future value of your mutual fund investments by using the Bajaj Finserv SIP Calculator, eventually helping you to make informed decisions. 

What transactions can be done through the OTM facility

  • SIPs: OTM eliminates the need for submitting bank details or a cancelled cheque. It is very easy to Commence new SIPs seamlessly through the OTM service.
  • Fresh Lumpsum Investments: Conduct transactions for your investments by utilising the fixed limit specified in the OTM form.

Read more about, What is Lumpsum Investment.

How to set up a one-time mandate (OTM) for mutual fund SIPs

Registering a one-time mandate for your mutual fund SIP is a straightforward process, which you can conveniently do online through net banking or by providing your debit card details.

Here is a step-by-step guide to initiate the OTM registration:

  1. Visit the mutual fund house's website or an investment platform like the Bajaj Finserv platform.
  2. Navigate to your profile section and choose the 'autopay' or 'set-up autopay' option.
  3. Pick your bank and select your primary savings account for automatic deductions.
  4. An OTP will be sent to your registered mobile number. Enter the OTP to verify your bank account.
  5. Verify your bank account through either debit card details or net banking.
  6. You will be redirected to your bank's website to confirm the provided details.
  7. After confirming the OTM details and completing the process, you will be directed back to the mutual fund house's website.

Eligible schemes for OTM

The OTM facility is applicable to a wide range of mutual fund schemes available on the Bajaj Finserv platform. Whether it is equity funds, debt funds, or hybrid funds, investors can leverage the benefits of OTM across various schemes.

How to automate an SIP

Automating an SIP through OTM is user-friendly. After successful registration, investors can set their SIP preferences, including the frequency and amount. The OTM ensures that these preferences are executed seamlessly at the scheduled intervals.

Conclusion

In conclusion, the One Time Mandate (OTM) in Systematic Investment Plans (SIP) emerges as a game-changer in simplifying and streamlining the investment process for mutual fund enthusiasts. This innovative facility not only enhances the convenience of transactions but also significantly reduces the administrative hassles associated with regular SIP investments. By allowing investors to automate their SIP payments through a one-time setup, OTM brings forth efficiency and ease of use.

Investors now have the flexibility to initiate fresh lumpsum investments and set up new SIPs seamlessly, without the need for redundant paperwork or resubmitting bank details. The registration process, requiring just one-time documentation, ensures a swift and hassle-free experience. With added security measures such as OTP verification and bank account confirmation, OTM provides a reliable and secure platform for investors to manage their mutual fund investments effortlessly.

As financial landscapes evolve, tools like OTM play a crucial role in empowering investors, allowing them to take charge of their financial journey with confidence and convenience. In embracing the OTM in SIP, investors not only unlock a more streamlined investment experience but also pave the way for a future where mutual fund investments are more accessible and user-friendly.

To make an informed choice, you can visit the Bajaj Finserv Mutual Fund Platform and browse through over 1,000 mutual fund options. You can even compare different funds and select the fund that best aligns with your goals.

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Frequently Asked Questions

What is OTM full form in mutual fund?

OTM stands for One Time Mandate in mutual funds.

How OTM works?

OTM works by enabling investors to register once and automate their SIP transactions, eliminating the need for manual intervention.

Where is the OTM registered?

The OTM is registered on the Bajaj Finserv platform, providing a secure and streamlined experience.

Who is eligible to avail this facility?

All investors on the Bajaj Finserv platform are eligible to avail the OTM facility.

Is the OTM mandate registration at a scheme level or at a folio level?

The OTM mandate registration is at the Folio level, ensuring comprehensive coverage for all schemes within that folio.

How much time will it take to register the OTM?

The OTM registration process is quick and can be completed in a few simple steps, ensuring minimal time investment for investors.

Is OTM in mutual funds available for all?

The One Time Mandate (OTM) is available for all existing individual and non-individual investors who have a folio number. It streamlines mutual fund transactions, allowing quick SIP setup and reducing risks compared to the older ECS system.

Can OTM in mutual funds be modified?

One Time Mandate (OTM) in mutual funds allows automatic SIP investments. While you cannot modify an existing OTM, you can cancel the existing one and set up a new one with revised details if needed.

Can OTM in mutual funds get rejected?

Yes, One Time Mandates (OTMs) in mutual funds can get rejected. Reasons include incorrect details provided or if the investor’s bank is not part of the National Automated Clearing House (NACH).

What transactions can be done through the OTM facility in mutual funds?

The One Time Mandate (OTM) in mutual funds allows investors to set up recurring payments, such as Systematic Investment Plans (SIPs), within 2-3 days, compared to the older ECS system that took up to 30 days. The OTM eliminates the need for multiple cheques and minimises the risk of rejection due to signature mismatches.

How many SIPs can be registered with one OTM?

There is no limit to how many Systematic Investment Plans (SIPs) you can register under a single One Time Mandate (OTM). However, ensure that the aggregate value of all SIPs falls within the specified limits.

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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.