Comment on Introducing e-Mandates – Now fund your SIPs automatically

Saurabh commented on 02 Feb 2020, 08:57 AM

So, if I register an e-mandate, it will give Zerodha the ability to withdraw funds from my bank account. But, how does it help me in an SIP? To schedule an SIP, I will also have to schedule a fund transfer from my bank account to Zerodha trading account, ideally 1 day before the the SIP is scheduled. For example, if my SIP of 10,000/- is scheduled for 8th of every month, I should ideally schedule a fund transfer of 10,000/- on 7th of every month.

The real value add of an e-mandate would have been when the amount gets deducted from my account automatically, on the day of the SIP transaction, without me having to scheduling a fund transfer. For example, in Feb 2020, 8th is a Saturday. So, my SIP transaction scheduled for 8th Feb will actually happen on 10th Feb (Monday). The e-mandate would be useful only if it can automatically deduct 10,000/- from the bank account on 10th Feb, when the SIP is presented. In the current process, the fund transferred to Zerodha trading account will lay unused for 3 days.

Why would anybody want go through all these hassles, and pay Zerodha for it (when they start charging)? Why should I just not go ahead and schedule a recurring NEFT transfer from my registered bank account to Zerodha trading account based on the schedule of my SIPs? What additional benefits do I get by registering an e-mandate?

Platforms like Kuvera already support the flow where e-mandates facilitate automatic deductions from bank account for mutual fund SIPs on the same day without the need for scheduling fund transfer.

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