Mandates: what are they, and how do they make life easier? In simple terms, a mandate is an instruction you give to your bank or a service provider, authorizing them to handle recurring payments or specific transactions on your behalf. Mandates come in different forms and serve various purposes, from automating SIPs (Systematic Investment Plans) to ensuring timely EMIs and subscription payments.
Now, there are different types of mandates available, and each one works slightly differently based on the purpose it serves. For this discussion, Iām focusing on e-mandates, as they are increasingly popular and relevant today. If youāre interested, let me know, and Iāll dive into the details of other types of mandates as well.
What is an E-Mandate?
An e-mandate is a digital version of a traditional mandate. It allows you to automate recurring payments like investments, utility bills, or loan EMIs, directly from your bank account. With e-mandates, thereās no paperwork involvedāitās all done online through secure platforms.
For traders and investors using discount brokers, e-mandates are especially beneficial as they streamline payments for investments and maintain adequate funds in trading accounts.
How E-Mandates Work
Hereās how e-mandates function, whether youāre setting them up for bank-related payments or through a discount broker:
Setup:
Log in to the platform where you want to enable recurring payments (e.g., investment platforms, trading accounts, or service portals). Provide necessary details like your bank account number, transaction amount, and frequency.Verification:
Authenticate the e-mandate using secure methods such as net banking, debit card, or OTP.Activation:
Once verified, the bank or service provider activates the mandate, and your payments begin automatically.Notifications:
Before and after every transaction, you receive alerts to ensure complete transparency.
Benefits of E-Mandates
E-mandates are a game-changer for both investors and service providers, especially discount brokers and banks. Hereās why:
Convenience: Automates payments, saving you from logging in and processing them manually.
Timely Payments: Ensures no missed deadlines for EMIs, SIPs, or bills.
Flexibility: You can modify or cancel the e-mandate anytime as per your needs.
Transparency: Alerts and notifications keep you updated about every transaction.
Security: Multi-factor authentication makes the process secure.
Where Are E-Mandates Used?
E-mandates can be applied in several areas, making them a versatile tool for managing recurring payments:
Investments (SIPs): Automate your contributions to mutual funds or other investment plans.
Loan EMIs: Avoid late fees by automating monthly installments.
Utility Bills: Keep essential services like electricity, water, and internet running without interruptions.
Insurance Premiums: Ensure your policies remain active with on-time payments.
Subscriptions: From OTT platforms to gym memberships, e-mandates take care of recurring charges.
Trading Accounts: Ensure a smooth trading experience by maintaining sufficient funds automatically.
Why Discount Brokers and Banks Recommend E-Mandates
For banks and discount brokers, e-mandates simplify operations and enhance the user experience:
Efficiency: Automating payments reduces manual interventions and errors.
Customer Satisfaction: Seamless transactions keep customers happy.
Reduced Failures: Ensures sufficient funds for transactions, minimizing disruptions.
What to Keep in Mind
Transaction Limits: E-mandates typically support payments up to ā¹1,00,000 per day, with higher limits requiring additional approvals.
Processing Time: Activation can take up to 10 days, so plan ahead if you have urgent payments.
Platform Specific Features: While the core functionality remains the same, the interface and process may vary between platforms.
Conclusion
Mandates, especially e-mandates, are reshaping how we handle recurring payments. They offer convenience, security, and efficiency for both personal and financial commitments. Whether youāre automating your SIPs, ensuring timely EMIs, or maintaining trading account funds, e-mandates simplify the process and let you focus on what truly matters, your financial goals.
My Note :)
While writing this, I realized there isnāt a single platform where all this information is available in a structured way. I had to research multiple sources like Quora, Reddit, and other financial forums to piece together this blog. However, based on my study, I hope this article helps you better understand e-mandates and their benefits. If you have questions or want me to explore other types of mandates, feel free to share!