What is OTM in Mutual Funds?
- 18th September 2025
- 10:00:00 AM
- 7 min read
A one-time mandate (OTM) makes the recurring mutual fund payment smoother. Due to manual transfers, many investors miss payments or lose track of their systematic investment plans (SIP) dates. The OTM in mutual funds resolves this problem by guaranteeing your investments are made promptly without any hassle.
Let us understand what is one-time mandate in mutual funds, how it works, and how to initiate an OTM with this blog.
What Do You Mean by OTM in Mutual Funds?
Every online trading application and mutual fund firms offer this one-time mandate. It allows the trading platform to automatically move a certain amount from your bank account to your mutual fund investments regularly.
The best part of this tool is that it manages your investments automatically with just one setup. Whether you are investing in mutual funds monthly or quarterly, OTM ensures depositing your money on time. In this manner, even if you are busy or forget, you do not miss your investment.
How Does OTM Function?
Since you are familiar with what is one-time mandate in mutual fund, let us understand how it works with an example.
For instance, you started an SIP of INR 3000 every month in a mutual fund scheme. You set up an OTM with your bank to send INR 3000 to your preferred mutual fund on the 6th of each month. After you set up everything, on the 6th of every month, your bank will automatically deduct INR 3000 from your account.
Your mutual fund account will subsequently receive the money, which you can use to buy scheme units at the current price. Every month, this procedure will repeat without your involvement.
The most important thing to keep in mind is that on the day of the transfer, you must have sufficient funds in your bank account. If there is not enough money in your account, you risk missing that month’s investment for the transfer to occur.
Characteristics of One-Time Mandate in Mutual Funds
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One-Time Setup
Like the name suggests, you only need to set it up once, and it continues to work for the specified amount of time.
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Easy Modification
You may simply adjust or cancel the OTM if your financial circumstances change.
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Flexibility
Depending on your preferences, you may choose the amount, frequency, and mandate duration.
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Applicable for All Fund Houses
You can link one OTM with multiple fund house schemes, and you do not have to repeat the procedure with every fund house.
How to Initiate an OTM in Mutual Funds?
By following the steps below, you can set up an OTM in mutual funds:
- You can set up the one-time mandate via a mutual fund platform or your bank.
- Provide the essential details about your bank account, the amount you want to invest, and the frequency of your investments.
- You will receive a one-time password (OTP) in your registered mobile number from the bank or platform to confirm your information.
- Depending on your preferred method, you must either sign a paper document or authorise the mandate digitally.
- You will receive a confirmation from your bank or the investing platform once everything is set up.
Although the online process is typically faster, you must note that certain banks may require you to visit a branch or provide hard copies of your documentation for validation.
How to Initiate an OTM for a Mutual Fund SIP?
If you want to set up a one-time mandate in mutual fund, especially for a mutual fund SIP, you can do it using both online and offline procedures:
Setting One-Time Mandate Online Using the Bank’s Portal
- Go to your bank’s online portal and identify the mandate or standing instruction section.
- Enter the necessary information, including your bank account, registration or folio number, the amount you want to invest, the frequency, and the total tenure.
- Once you have put all the information in, submit the mandate.
- Enter the OTP that you have received on your mobile number to confirm the obligation. You will register the mandate when you submit the OTP.
Setting One-Time Mandate Online Using Mutual Funds Platform
- Enter your login credentials to access the platform.
- Find the OTM option under your mutual fund investment.
- Among other things, you may have to provide information such as your bank, branch name, account number, and IFSC.
- You must authorise the request on your bank’s site after entering the necessary information.
- After the request is accepted, the OTM will be registered.
Setting One-Time Mandate Offline
- You must obtain a physical mandate form from your bank or the mutual fund AMC.
- Fill it, sign it, and submit it.
- Offline mandate requests may take several weeks to process, in contrast to online mandates that are registered and executed immediately or within a few days.
- When enrolling for a one-time mandate offline, you must take the time delay into consideration.
If you are seeking mutual fund investment plans, download the PL Capital Group – Prabhudas Lilladher application. PL allows you to open a Demat account for free and invest in mutual funds from more than 35 mutual fund categories.
Benefits of Choosing OTM in Mutual Funds
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Convenience
You do not have to worry about remembering to make consistent investments once everything is set up.
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Time-Saving
With OTM, every investment does not require you to visit a bank or log into your account because it takes care of everything.
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Cost Effective
OTM services are typically provided by banks and mutual fund companies for free or at a very low fee.
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Smooth Registration Process
It just takes a few minutes to complete the online mandate registration process. You just need to complete and submit one mandate form, even if it is done offline.
Final Thought
Initiating an OTM in mutual funds allows you to automate your investing. This enables you to manage your spending more effectively and reduce stress and worry. However, you must remember that you must have a sufficient amount in your bank account for automatic debits to be successful.
You can start an SIP using the PL Capital application by simply opening a Demat account for free. You can choose the best mutual fund plan according to your investment goals and risk tolerance.
Frequently Asked Questions
1. How does one go about terminating an OTM mandate in mutual funds?
Only OTMs without an ongoing SIP or lump sum purchase linked to them can have their cancellations started online. Before starting the OTM cancellation process, transactions that are already recorded with the OTM must be cancelled.
2. What distinguishes SIP from OTM in mutual funds?
OTM registrations allow investors to give their bank permission to automatically deduct a certain amount from their account. This makes investing in SIPs easier and more efficient. There is no difference between them.
3. Does establishing an OTM in mutual funds incur any fees?
You can avail OTM services for free from the majority of banks and mutual fund companies. Nonetheless, it is always a good habit to inquire about possible fees with your particular bank or investing platform.
How long does it take to approve an OTM registration?
The process takes no more than 30 days, while the time frame will vary depending on National Automated Clearing House (NACH) and Electronic Clearing Service (ECS) procedures.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
