One Time Mandate (OTM) or NACH facility is a one-time mandate registration process that will enable you to transact seamlessly in a simple, convenient and paperless manner in the future. Many times you read that SIP needs “OTM” or “Auto Debit” registration, so that you don’t have to issue multiple cheques.
It is also called NACH mandate. So let us see the various field of OTM form & how this OTM works.
What is One Time Mandate or OTM?
Using the OTM facility, you can instruct your bank to allow a debit of a certain amount, with a fixed daily upper limit in your account, whenever you wish to transact. Having registered an OTM you can subscribe without having to initiate any payment from your end.
This OTM facility works through a centralized payment or transaction processing system managed by National Payments Corporation of India (NPCI). This is called NACH or National Automated Clearing House (NACH). Hence OTM is also called a NACH mandate.
NPCI is RBI controlled body and takes care of payment clearances between government, banks, financial institutions & corporates.
NACH has made the transactions, especially which are periodical in nature like payments of SIPs, EMIs, Credit Card payments, Utility payments, etc. easy for the general public.
Benefits of One Time Mandate (OTM)
- It is a one – time registration process. So no need for multiple registrations.
- Helps to invest through any mode (Physical/SMS/Website).
- Invest without a cheque/DD/transfer funds online.
- Register payments like SIP’s in 5 days for OTM registered investors.
- Through OTM Auto Debit facility like ENIs etc can be availed or arranged
Especially in MF investments, OTM is a great help. You can do just by mention the unique Registration Number in new investment without issuing a cheque.
Knowing OTM (One Time Mandate) or NACH Mandate
It looks like this:
The One Time Mandate is a financial document. It is payment advice.
Hence one must know what it means. Also, what does each field in OTM mean?
Here are the components or OTM or NACH mandate.
1. Mandate can be Created, Modified or Cancelled. Tick accordingly.
2. Date
This is the date on which you are filling your mandate form. Enter in (DD) Month (MM)
Year (YY) format only.
After the date, the 2 columns are for office use. The third column/box is for whom the mandate is issued. It could be a financial institution, a mutual fund (as mentioned here) or a utility company. Do not sign on BLANK as this is the name to which you are authorizing payment (like a cheque). Always get it filled before signing. Companies like MFs or telecom are getting it published.
3. Account Type
Please select the type of account (SB/CA/CC/SB_NRE/SB_NRO/ Other) held by you against which the mandate is being issued.
Tick only one account type.
4. Bank A/c Number
This is your bank account number (the account type you ticked above) for which this mandate is issued. Enter the core banking account number in full.
5. Fill Bank Name & Branch.
6. IFSC Code/MICR of the above mentioned Bank & Branch. This is the 11 digit IFSC code and the 9 digit MICR code of the bank branch mentioned above.
7. The Amount in words
Mention in words the amount that is to be debited from your bank account. This amount is the limit that you wish to set for ABSLAMC. This can be higher the SIP Amount.
8. The Amount in figures
Mention in figures the amount that is to debited from your bank account
Amount in figures should match the amount in words
9. Frequency
This is to indicate whether the frequency of your debit transaction is Monthly, Quarterly, Half-Yearly, Yearly or as and when presented. Select only one option.
10. Debit Type
This indicates the fixed amount or maximum amount for which the debit mandate is issued by you
Choose option – fixed (when a fixed amount payment needs to be made like a monthly SIP) or
maximum (when variable amount payments need to be made like electricity bill)
The preferred option would be maximum as this gives you flexibility in future transactions also.
Do not choose both options.
11. Reference 1/ Reference 2
It is your reference number and additional reference number that has been allotted to you by the Mutual Fund or the company. This is filled by the service provider, so you can leave it blank in case you are filling for the first time.
12. Phone/ Email
Your contact details which include Mobile No. and email.id. Both should be working. It is in your interest.
13. Period of the Mandate
This is the ‘From date and To date’ for which the mandate is effective.
Mention in the DDMMYYYY format. Do not fill both until canceled and end date.
14. Signature (s)
This is your signature as you would do on your cheque. Primary and all joint holders need to sign as per bank records. A mandate can be registered only when signature matches as per your bank records.
15 Name of Account holder(s)
Your name/account holder as appearing in the bank records. So if your PAN has name Madhupam Krishna & Bank has name Madhupam Krisna, mention as per bank records. (Ideally, Madhupam needs to visit the bank with his original PAN & Aadhar and get his name spelling corrected)
Primary and all joint holders’ names to be mentioned.
Is OTM safe?
Yes, as mentioned it is an electronic system managed by RBI with help of Banks, it is safe to transact. One must be careful while issuing a new or modifying an existing mandate.
OTM charges?
Mutual Fund or service provider do deduct any charges but banks may deduct some charges. These are one time charges. SBI deducts Rs 50 + GST for OTM registration for certain category of bank accounts.
Hope the article helped you know OTM or One Time Mandate in a better way.
It not only facilitates payments it is also a system for “account holder protection”. Various features like fixing the amount of debit, fixing frequency, and references like mentioning folio help its misuse.
Do ask me in case you have a query in the comments section below. Share your experiences with OTM facility with us.
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Hope the information of OTM Mandate is useful and you now feel more confident while using it. Share your views below in the comments section.
