E-Mandate/Autopay in Mutual Fund

When you plan to invest in a mutual fund regularly via SIPs or recurring payments, setting up an e-mandate (or autopay) lets you automate that process. An e-mandate (or mandate in mutual fund parlance) is essentially your permission to the bank to debit your account periodically and invest in a fund scheme without repeated manual steps.

In this article, we explain what is e-mandate, how to set it up, what amounts to authorise, and how it works. We also discuss its validity and types of transactions supported, finally concluding with key takeaways.

Table of contents

• How can you set up an e-mandate?
• What amount of mandate should one set up?
• How do e-mandates work for mutual funds?
• How long does a mandate work?
• What type of transactions can be done using it?

How can you set up an e-mandate?

You may register an e-mandate via online channels (net banking, certain apps, or via mutual fund or registrar portals). Most steps are digital, avoiding physical paperwork. The broad steps are:

• Log in to your bank’s net banking or mobile banking portal (if your bank supports e-mandate/NACH).
• Under ‘Recurring Payments’ or ‘Auto-debit / Mandates’ section, select ‘Mutual Fund / SIP e-mandate’.
• Enter your bank account details (account number, IFSC), the mandate amount, frequency (e.g. monthly), start date, and end date.
• Authenticate via OTP (sent to your registered mobile) or e-sign (Aadhaar e-KYC).
• Once bank processes, the mandate becomes active and linked to your mutual fund account or registrar (such as via a CAMS or registrar portal––CAMS has a ‘CAMSPay e mandate registration’ facility).
• After activation (which can take a few hours to a couple of days), you can start investing under that mandate.

The exact flow may vary across banks, AMCs, or registrars. The registration is typically paperless in the current process (no physical signature needed).

What amount of mandate should one set up?

Choosing a mandate amount involves a balance:

• The mandate amount should be at least as high as your highest SIP instalment, so that your intended SIPs never fail due to the mandate limit.
• Some platforms suggest a buffer: for example, if your SIP is Rs. 4,000, you might set a mandate of Rs. 5,000 or Rs. 10,000 to accommodate future increase or multiple SIPs under the same mandate.
• Because a mandate can allow you to initiate multiple SIPs or lumpsum investments (up to the authorised limit), keeping some flexibility may help in future adjustments without reauthorising a fresh mandate.
• However, it is prudent not to overshoot too much, authorise only as high as you are comfortable letting the bank debit periodically, considering your cash flow.

In short: set the mandate a little above your expected investment, not far beyond what your bank account can safely support.

Read Also: OTM in Mutual Funds: Full Form, Meaning and Benefits

How do e-mandates work for mutual funds?

Once an e-mandate is active, here is the operational flow:

• You register the mandate (as explained earlier).
• The mutual fund’s registrar or platform instructs NPCI/NACH with mandate details.
• After registration, NPCI routes the instruction to your bank; on each due date the bank debits your account and the fund house receives the money for unit allotment. An e-mandate authorises debits only; redemptions are separate credit transactions handled by the fund/registrar.
• Your bank deducts funds (if balance is sufficient) and passes it to the mutual fund’s account.
• The mutual fund houses allot units to you at the prevailing NAV on that day.

Since the mandate is pre-authenticated, the debit happens automatically, removing manual intervention or delay. If the account has insufficient funds on a particular date, the debit fails for that installment. The fund house or registrar may notify you (or show as SIP debit failure). Hence it is considered important to choose a mandate amount you can reliably maintain in your bank account.

How long does a mandate work?

Earlier, ‘perpetual mandates’ (i.e., ‘until cancelled’) were allowed for mutual fund investments. However, since October 1, 2023, NACH (a system under NPCI) has mandated that all SIP mandates must have a fixed end date, and mandates cannot exceed 30 years from the date of issuance. Hence, the option ‘until cancelled’ is no longer accepted for new mandates; you must specify a final collection date. If you have an older perpetual SIP mandate (issued before 30 September 2023), it remains unaffected. Therefore, a mandate works up to its end date (up to 30 years), unless you cancel earlier.

What type of transactions can be done using it?

Types of transactions allowed under mandate

Primarily, mandates are used for:

• SIP / recurring investment: periodic instalments into mutual fund schemes.
• Lumpsum investment: some systems allow one-time debits (up to the mandate amount) under that mandate. (i.e., you may use the same mandate for a one-off purchase as long as it does not exceed authorised limit.

However, mandates cannot be used for all operations, they do not automatically allow redemptions or withdrawals; they are debit instructions from your bank to invest, not credit directions from fund to your account. Also, SEBI has allowed mutual fund purchases via ‘one-time mandate’ through recognised clearing houses (from April 1, 2022); this is a slightly different context, where a one-time mandate is accepted only for subscriptions, not for withdrawals or other usage.

Conclusion

E-mandate (also known as autopay) in mutual funds is a modern and paperless way to allow for automated recurring investments, also known as SIPs.

An e-mandate essentially allows your bank to debit a pre-defined frequency from your savings or checking account, and it allows for less manual steps and delays. E-mandates can either be set through online banking or mobile apps, and they can require authentication through one-time passcodes (OTP) or e-signatures. It is important to set the e-mandate for an amount you are comfortable with because if the e-mandate is for an amount lower than what the SIP is for, then your recurring investment will not be successful.

From October 2023, as established on the NACH rules, e-mandates in India allow a maximum end date of 30 years. E-mandates only take effect for recurring and one-time investments, and they do not allow for the redemption of accounts. Be cautious whenever using an e-mandate, keep close watch of your bank account and investment accounts, and if your financial situation changes in the future, you may cancel or change the e-mandate as appropriate.

Read Also: How to start an SIP with a One-Time Mandate?

Frequently Asked Questions

Why is a mandate required for mutual funds?

A mandate gives the mutual fund and your bank pre-authorised permission to debit your account periodically (or for one-time use) without repeated manual steps. It ensures your SIP or recurring investment happens automatically and reliably.

How does a mandate work in a mutual fund?

Once the mandate is set up and active, on each scheduled date, the bank debits your account per the mandate, sends funds to the fund house, and the mutual fund allots units to you. This cycle continues until the mandate expires or is cancelled.

Can I change my mandate after it’s been set up?

Yes, you may modify (increase amount, change frequency, or end date) or cancel a mandate via your bank or registrar portal, subject to their procedures.

Is a mandate mandatory for investing in mutual funds?

No, a mandate is not strictly mandatory to invest in mutual funds. You can also invest via lumpsum payments without a mandate. However, for recurring investments like SIPs, a mandate or pre-authorisation is typically needed to automate the process.

Mutual Fund investments are subject to market risks. Please read all scheme-related documents carefully.

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