The financial systems of the country are going through some major reforms in order to make the process of saving and investing easy and simple. Investors have time and again expressed their disapproval of the tardy process involved in making payments for Systematic Investment Plans of mutual funds. This can be resolved through the new system of issuing a “Bank Mandate Form” to automate the entire process.
A bank mandate is when a third party such as the bank will be authorized to debit one’s account on predetermined dates to pay one’s SIP installments. In other words, bank mandates are standing instructions to one’s bank regarding periodic transactions.
These bank mandate forms are necessary when one is investing in SIPs and requires payments to be made on specific due dates. Submission of these forms will ensure that the invested amount is auto-debited from one’s savings account as the bank will have the requisite authorisation.
The bank mandate form must be submitted by the investor to the bank. It is a simple form that has to be filled, signed and submitted to the bank branch in which one has his or her savings account. The submission of this form will allow the Asset Management Company of the mutual fund to direct a fixed sum of money toward the mutual fund.
Bank mandates can be provided in 2 ways for investing in mutual funds through the Fisdom app.
On receiving the approval from the bank, there will be an auto debit of the amount on the chosen SIP dates. However, if the approval is received prior to the SIP date (as stipulated), then the debit will happen in the succeeding month. These debits will happen on a periodic basis unless there are express instructions to stop the same. The investor will receive a debit confirmation from the bank and the AMC will display the amount received and the units allocated on their fund house’s dashboard.
It is mandatory to issue bank mandates to authorise one’s bank for SIP payments to be initiated.
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