How to Set Up SIP Autopay

A mandate is an instruction you give your bank. It says that a particular fund house may debit up to a set amount from your account, on a set schedule.

It does not let anybody take money freely. The debit can only be for your SIP, only up to the limit you chose, and you can cancel it any time through your bank or the fund house.

Only the actual instalment is debited each month. If your mandate limit is higher than your SIP, the extra is simply unused room, which our page on the mandate limit explains in detail.

The newest and quickest way, and the one most apps now offer first.

You approve the mandate in your UPI app with your PIN. It is usually active within minutes, so the first instalment can go through in the same cycle.

The catch is the amount. UPI autopay has an upper limit per debit that is lower than the other methods, and it can change. For a small or medium SIP it is ideal. For a large one, an e-mandate is usually needed.

The most common method for regular SIPs.

You are sent to your bank page, log in with net banking or authenticate with your debit card, and approve the mandate there. Registration usually completes within a few working days.

It allows higher limits than UPI and works with almost every bank. Not every bank account supports it, particularly some older cooperative bank accounts, in which case the paper form is the fallback.

The oldest method, still useful for people who do not use net banking.

You fill and sign a physical form, which is sent to your bank for verification. The signature has to match your bank records exactly, and a mismatch is the most common reason it gets rejected.

It can take a few weeks to register. Where somebody is setting up a SIP for an elderly parent who does not use apps, this is often the practical route, as our post on investing for parents who are not comfortable with apps describes.

This is the one setting people get wrong, and it causes trouble years later.

If the limit equals your SIP exactly, raising the SIP later needs a fresh mandate, which means more paperwork and a gap. Set it comfortably above what you pay today, with room for future increases.

A higher limit costs nothing. Only the actual instalment is ever debited. If you plan to use a step-up SIP, the limit must cover the amount it will reach, not just the starting amount.

Pick a date a few days after your salary or main income reliably lands in the account.

No date gives better returns. What the date decides is whether the debit succeeds. A debit on the salary date itself can fail if the salary is a day late, and a debit at month end often fails because the money has already been spent.

Our page on choosing the instalment date covers this properly.

In our experience, almost always one of four reasons.

Not enough balance on the debit date.

The SIP was raised above the mandate limit, so the bank refuses the larger amount.

The bank account changed and the mandate still points to the old one.

The mandate was never fully registered, often because of a signature mismatch on a paper form.

One failed debit carries no penalty from the fund house, though your bank may charge a fee. Several in a row can lead to the SIP being cancelled. Our post on missing a SIP payment explains what happens next.

You can cancel through the fund house, the platform you used, or your bank. Cancelling the mandate stops future debits but does not sell anything you already hold.

If you change banks, register a new mandate on the new account before closing the old one, so no instalment is missed. Our post on updating the bank account on a folio covers the steps.

To stop a SIP fully, cancel the SIP itself, not just the mandate, as our post on stopping a SIP explains.

A few situations need a little extra care.

Joint bank account: the mandate must be approved according to how the account operates. If both holders must sign, both have to authorise it.

SIP in a child name: the mandate is usually set on the guardian bank account while the child is a minor, and must be changed once the child turns eighteen.

SIP for a parent: the mandate must be on the parent own account, since the investment is in their name. Paying it from your account is not allowed for a folio in their name.

• KYC done, per our page on mutual fund KYC.
• Pick the method: UPI for smaller SIPs, e-mandate for larger ones, paper if no net banking.
• Set the limit higher than today SIP.
• Pick a date a few days after income lands.
• Check the first statement to confirm the instalment went through.

If you want help setting up the mandate properly the first time, get in touch.