What is E-Mandate in Mutual Fund

The key to successful investment is consistency. While the market can be volatile, staying calm and avoiding panic withdrawals can lead to gains when the market rebounds.

To navigate short-term fluctuations, experts recommend investing in mutual funds through SIP. With this approach, you regularly invest a fixed amount of money, whether monthly or quarterly. For SIP investment, a crucial aspect is e-mandate.

In this article, we will cover what e-mandate is in mutual funds and its importance in detail.

What is E-Mandate in Mutual Funds?

An e-mandate is an e-authorization method for banks to allow mutual funds to debit fixed sums regularly from an investor’s account.

The Reserve Bank of India and National Payments Corporation of India jointly introduced this payment facility in 2018.

Before e-mandating, as an investor, you had to visit your bank in person and submit the physical application with details of your investment to get approval for recurring payments auto debit.

The whole process used to take a few days. But now, with e-mandate, the turnaround time has been reduced significantly and it has become online.

Prerequisites for Mutual Fund E-Mandate

The financial institution must be registered with NPCI and must be authorized to provide National Automated Clearing House (NACH) services.
Ensure you have a valid Aadhaar card.
An online e-mandate registration form that needs to be completed with accurate details.
A mobile number that is linked to both the bank account and the Aadhaar card.
Information on the bank account from which the SIP installments will be debited
Attach either a canceled cheque or a copy of a bank statement for bank account verification.
Email address to receive confirmation and receipt of the NACH e-mandate registration.

How to Register for E-Mandate?

Here are the steps required for registering for an e-mandate:

Step 1: Access your bank’s net banking portal and log in with your credentials.
Step 2: Find the e-mandate option on the dashboard or under the payments/services menu.
Step 3: Enter the details of the service provider for whom you want to set up the e-mandate.
Step 4: Specify the payment details, such as the amount, start date, frequency, and end date of the mandate.
Step 5: Confirm the bank account from which the payments will be debited.
Step 6: Choose your preferred payment method, like debit card, credit card, or net banking.
Step 7: Authenticate the transaction using an OTP (One-Time Password) or other bank-provided security methods.
Step 8: Review all details and confirm the setup of the e-mandate.
Step 9: The bank will verify the details and set up the e-mandate.
Step 10: You will get a notification assuring the successful registration of the e-mandate.

Remember, the e-mandate limit for a single transaction is typically set at Rs 1,00,000. Additional authentication may be required for transactions above this limit.

Understanding E-Mandate Working in Mutual Funds

Step 1: You register for e-mandate with your asset management company (AMC).
Step 2: The NPCI will then send the mandate to your issuing bank.
Step 3: Your bank will debit the SIP amount from your bank account.
Step 4: The debited amount will be transferred to your fund house’s bank account.
Step 5: The sponsor bank sends the invested amount to the AMC

To cancel e-mandates in Mutual Funds, follow these steps:

Step 1: Log in to your net or mobile banking application.
Step 2: Navigate to the ‘e-mandate’ or ‘Recurring Payments’ section.
Step 3: Locate the e-mandate you wish to cancel and select the ‘Cancel’ or ‘Deactivate’ option. Please note that any systematic transaction linked to that mandate will also be canceled upon cancellation.
Step 4: Go to Mutual Fund > Manage Bank Account > Your Registered Bank section for real-time cancellation.

Benefits of Using E-Mandates in Mutual Funds

You can set up e-mandates quickly through online banking platforms. This eliminates the hassle of physical documentation.
The digital nature of e-mandates significantly cuts down the time required to start Systematic Investment Plans (SIPs), from weeks to just a few days.
Automation eliminates the risk of errors associated with manual entries.
Regular, automated investments encourage financial discipline among investors. It helps you benefit from compounding and consistent growth of your mutual fund portfolios.
E-mandates offer various types, such as fixed, variable, and unlimited period mandates, catering to different investment needs and preferences.
E-mandates reduce the administrative burden for mutual fund companies, leading to better operational efficiency and customer service.
By eliminating the need for physical checks and forms, e-Mandates save printing, mailing, and processing costs.
Digital mandates are more secure than physical forms, eliminating the chance of fraud and unauthorized access.

Conclusion

E-mandates in mutual funds offer a convenient and efficient way to automate regular investments.

By enabling electronic authorization for recurring payments, you can set up SIPs easily and securely through online banking platforms.

This digital approach saves time, promotes financial discipline, enhances operational efficiency for mutual fund companies, and reduces the risk of errors and fraud associated with manual processes.