Investing in the right mutual funds through SIPs is a great way to build wealth over the long term. With a SIP, a fixed amount—set by you when creating your plan—is automatically deducted from your bank account every month on a specified date. But what’s the technology that makes these recurring investments possible? It’s called OTM or One Time Mandate.
In this guide, we’ll walk through everything you need to know about OTM—from how it works to why it might be the game-changer your investment routine needs.
What exactly Is an OTM and how does it work?
An OTM (One Time Mandate) is a financial authorization that you give to your bank, allowing mutual fund companies to automatically deduct money from your account for investments.
Think of it as a standing instruction that says:
“I permit this mutual fund house to withdraw a specific amount from my bank account on a regular basis.”
OTM may be set up through two modes: 1. Offline and 2. Online.
Offline OTM Registration – Process
Say you want to invest Rs. 10,000 monthly in a scheme of Axis Mutual Fund. Instead of manually transferring money each month, you can set up an OTM just once. Here’s how the process works:
- You fill out an OTM form with your bank details, specifying the maximum amount that can be deducted (you may set this at Rs. 25,000 or higher to give yourself flexibility).
- Submit this form to your mutual fund distributor, online investment platform, or directly to the fund house.
- Your bank verifies and approves the mandate, which typically takes 15-30 days for processing.
- Once approved, when you start a SIP of Rs. 10,000 in any scheme of Axis Mutual Fund, the system automatically uses your existing OTM to deduct this amount on your chosen date each month.
The beauty of an OTM is that you only need to set it up once for each AMC (Asset Management Company). So if tomorrow you decide to invest in another Axis Mutual Fund scheme for an additional Rs. 5,000, you don’t need a new mandate—your existing OTM covers it, as long as the total monthly deduction doesn’t exceed your total authorized limit.
Online OTM Registration – Process
The process of online registration of OTM is much more faster and direct than offline process. Here are the steps involved:
1. Navigate to e-Mandate / OTM section: Whether you’re directly purchasing mutual funds from an Asset Management Company, or you use third-party investment platforms (like Groww, Kuvera, or Zerodha Coin), navigate to the OTM or e-mandate registration section.
2. Fill in your bank account information, including:
- Account number
- Account holder name
- IFSC code
- Bank name and branch
3. Set your maximum deduction limit and tenure: Specify the maximum amount you authorize to be deducted and its validity tenure (say 10 years). It’s advisable to set this higher than your immediate investment plans (e.g., Rs. 50,000 or Rs. 1,00,000) to accommodate future increases. In this way, you can make room for accommodating more mutual fund SIPs in the same folio number without having to create new mandates every time. Just make sure, your total investments do not cross the maximum authorized limit of the mandate.
4. Last step – Authentication: Depending on the platform and your bank, you’ll verify your identity through one of these methods:
- Net banking authentication
- Debit card + PIN
- NACH e-mandate (which uses Aadhaar-based OTP verification)
- Penny drop verification (a small amount, say Rs. 1 is deposited and verified in your account)
Complete any additional security steps required by your bank. You’ll typically receive an OTP on your registered mobile number to confirm the registration.
After submission and verification, your OTM typically activates either instantly or with a few days (significantly faster than the paper process).
How OTM Differs from URN Registration?
OTM is a relatively new financial technology. Previously, investors relied on the URN (Unique Registration Number) for activating their SIPs. The OTM system and URN process, both facilitate automatic payments for mutual fund investments, but they work differently and offer distinct advantages.
Key Differences Between OTM and URN
| OTM | URN |
|---|---|
| You authorize your bank directly, setting a maximum deduction limit that applies to all investments with a particular fund house (AMC) | Each SIP registration gets its own URN (Unique Registration Number), linking a specific investment amount to a particular fund scheme. |
| Once set up, you can start multiple SIPs under the same fund house up to your authorized limit. You therefore create a a “pool” of pre-approved funds. | Each new SIP requires a fresh registration process and generates a new URN, even within the same fund house. |
Example:
If you have an OTM with ICICI Prudential for Rs. 50,000, you could start a Rs. 10,000 SIP in their Bluechip Fund, a Rs. 5,000 SIP in their Value Discovery Fund, and a Rs. 8,000 SIP in their Technology Fund—all using the same mandate, without any additional authorization steps.
On the other hand, with the URN system, each of these SIPs would require a separate registration process.
What’s your take?
Have you set up your OTM yet? If not, what’s holding you back? Perhaps you’re wondering if your investment amount is too small to bother with automation, or maybe you’re concerned about giving standing instructions to your bank.
The truth is, whether you’re investing Rs. 500 or Rs. 50,000 monthly, an OTM can save you time and reduce the friction that often leads to investment procrastination. Remember, investing consistently is often more important than investing perfectly. OTM helps make consistency easier. So why not give it a try with your next SIP?
Hi Abhishek. I have registered for my SIPs using URN method. For all future SIPs, I am definitely gonna try OTM.
Very clear explanation. I always thought URN and OTM are one and the same things. Now got the difference. Nice article.