Understanding Mutual Fund Bank Mandates: A Simplified Guide

What is a bank mandate in mutual fund investments?

A bank mandate is a crucial component of mutual fund investments, streamlining the process for investors. In essence, it's a one-time registration procedure that grants your bank account the authorization to debit funds, up to a predetermined limit, and transfer them to the mutual fund of your choice. This simplifies and modernizes the investment process, making it convenient and paperless.

Here's how you can add a bank mandate to your mutual fund investment:
  1. Access Your Profile: Start by visiting the 'profile' tab on your investment platform.
  1. Select 'Bank Mandates': Within the profile section, you'll find an option labeled 'Bank Mandates.' Click on it to proceed.
  1. Linked Bank Accounts: Here, you'll see a list of bank accounts that are linked to your trading accounts.
  1. Generate Mandate: To set up a bank mandate, click on the “Generate Mandate” button. Follow the subsequent instructions to complete the process.
It's worth noting that for automatic SIP (Systematic Investment Plan) investments, you may need to establish an E-mandate or a physical mandate. The choice between the two depends on your preference and the requirements of your investment platform. Here are some key details to consider:
  • E-Mandate: For automatic SIP investments on a specific date of the month, an E-mandate is often required. This mandates that a certain amount be debited from your bank account and invested in the mutual fund automatically.
  • Creating E-Mandate: You can conveniently create an E-mandate directly from your investment platform by filling out an online form.
  • Physical Mandate (NACH Form): Alternatively, you can opt for a physical mandate by downloading the NACH (National Automated Clearing House) form and uploading it on the investment platform.
  • Registration Duration: It's important to note that E-Mandate registration may take up to 10 days to become fully operational.
  • Mandate Limit: The maximum limit for a bank mandate is set at Rs. 100,000 per day. This means you can register multiple SIPs under the same mandate, provided they stay within this limit.
By following these steps and understanding the specifics of E-mandates and physical mandates, you can efficiently manage your mutual fund investments while enjoying the convenience of automated transactions.
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