Aug 02, 2017 4 min read

What is Bank Debit Mandate? Why Is It Necessary for SIP (Systematic Investment Plan) Investments?

Here’s everything you need to know about the debit mandate process in the mutual fund SIPs.
Have heard the term “Debit Mandate” many a time but don’t understand what it is? No worries, here’s the complete explanation of the debit mandate, its meaning, importance, and process involved.

What Is a Bank Mandate?

The debit mandate or the bank mandate is an authorisation that you give to a third party to collect a certain amount from your bank account at a regular interval. Under this, you authorise your bank through a mandate form, to auto-debit a sum of money from your bank account on due dates in the name of the person (i.e., the asset management company) for whom the form has been submitted.

What Is the Use of Debit Mandate in Mutual Funds? Is It Mandatory?

As you know that the systematic investment plan invests a specific amount on a regular interval in the mutual fund schemes, the amount so invested regularly is auto-debited from the associated bank account. Such auto-debit of the fixed amount from the bank on a regular interval has to be authorised by the account holder who has intended to start the SIP investments. Yes, it is mandatory to send the debit mandate, as until and unless the debit mandate is authorised by the bank, your SIP is not started.

Who Is Required to Send the Bank Mandate & to Whom?

If you are willing to initiate SIP investments in mutual fund schemes, you are required to send the debit mandate to the bank authorising the respective asset management company to debit a particular sum of money at a fixed interval of time from your bank for your SIP investments. After receiving the duly signed mandate from the investors, we send it directly to the respective bank for authorisation.

How Long Does It Take to Authorise the Debit Mandate?

After making the investment, it is required by the investor to download the debit mandate, sign it, and send it to us within 21 days. Once the debit mandate is received by our team via courier, we immediately send it to the bank for further processing. It takes almost 30 to 40 days to get the authorisation done after which the SIP is started.

When Is the Second SIP Instalment Debited?

Once the debit mandate is approved by the bank, the second SIP instalment is automatically debited on the chosen SIP date that occurs immediately after the approval. For example - At the time of investment, you selected 7th of every month as your SIP date. Once your debit mandate is approved, your SIP shall be debited on the next 7th. Suppose your mandate is approved on 30th January, your second SIP instalment shall be debited on 7th February, and further on every 7th of the succeeding months.

From Where Can One Get the Debit Mandate?

To help our investors make investments conveniently, we provide pre-filled debit mandate form which can be downloaded from their investment account easily. The simple process to download the mandate form is as under:

  1. Login to your investment account at MySIPonline.
  2. Open “My Profile” from the option given at the right top corner of the page.
  3. On the left side of the page, there are various profile related options, select the “Download Document” option.
  4. The list of documents that can be downloaded shall open, click on the download option given in front of the Debit Mandate.
  5. You can also mail your mandate to the registered mail ID, and download the same from your mail account.

What Is the Process of Authorising Debit Mandate?

After completing all the related forms, documentations, and other formalities to start your investment, the last requirement that you have to adhere to is the sending the debit mandate. You can simply download the pre-filled mandate form from the website, sign it and send it back to our registered address. Our team further send this mandate to your bank on your behalf for authorisation so that MySIPonline can get the approval of debiting a particular SIP amount from your bank account regularly. Bank takes its time to complete the process of authorisation, and once it is done, your SIP is initiated automatically. You are given updates about the status of this process of authorisation.

How Does Auto-Debit of SIP Amount Work?

When your SIP date arrives, MySIPonline sends a debit request to your bank. The bank then processes the request and subject to the availability of the funds, sends the money to the respective fund house. Once the debit confirmation is received from the bank, we send the investment request to the mutual fund house which then allows the units of the scheme and sends us the confirmation. Once this confirmation is received and confirmed, the same is made visible on your investment dashboard.

Accordingly, the debit mandate has a pivotal role in your SIP investments. It helps you to invest in the most convenient and hassle-free manner through which the SIP amount is automatically deducted from your bank and sent to the mutual fund of your choice. Hope this helped you get all the solutions to your queries related to the debit mandate. In the case of any further questions, you can get in touch with our operations executives at the MySIPonline Support Desk.