SIP eMandate Explained: Save Time & Grow Wealth Automatically

An eMandate is a one-time digital authorization with your bank for automatic, recurring Systematic Investment Plan (SIP) payments scheduled with mutual fund companies.

It is only done for banks registered with National Payments Corporation of India (NPCI), and sometimes referred to as eNACH.

While an upper limit is set, only the approved SIP amount will go through. You can for instance, have an upper limit of ₹1,00,000 (one lakh), but your approved SIP for ₹10,000 will only go thru.

However, if you want to increase your SIP to above ₹1 lakh, then you’ll have to repeat the Banking eMandate setup process. Sometimes, if you set a higher limit, you also have the advantage of using it to do ad hoc (lumpsum) mutual fund investments with a single click.

Setting up is a simple and fast digital process (though we can also do it offline, the physical process takes more time). You can change (modify) the instruction or cancel it online as well.

What are the benefits of setting up an eMandate?

By automating your SIPs with eMandates, you avoid delays and ensure a hassle-free, consistent investment journey. You do not need to remember payment dates or make manual transfers or worry about any signature mismatch. This ensures your investing happens without fail, and you won’t need to worry about timing or consistency or any other transactional failures.

Are there any fees for eMandates?

While there are no fees/charges by mutual fund houses for Banking eMandates, your bank may charge a fee for mandate verification, anywhere between ₹50 - ₹200 one-time. Here is a list of banks that do charge.

However, if an SIP is missed, due to insufficient balance (and this can be upto 3 times, before your SIP is cancelled) — this will trigger an eNACH transaction failure — and for each failure, you could be charged a penalty by the bank, anywhere between ₹200 - ₹500 per fund depending on the bank.

You can always speak to your bank relationship manager, but it is better to avoid missing SIPs by maintaining the correct balance for investing.

Will a missed SIP affect my CIBIL Score?

A missed SIP due to insufficient balance does not directly affect your CIBIL score because SIP payments are not loans or credit obligations. Mutual Fund SIPs are treated as voluntary investments, not debt repayments.