A Bank Mandate is the authorisation linking your bank account to your mutual fund folio — it designates the account for SIP auto-debits, lumpsum investments, and redemption credits.
A bank mandate in the mutual fund context serves two purposes: (1) Debit mandate — authorises the AMC to automatically debit your bank account for SIP instalments via NACH/eMandate. (2) Registered bank account — the bank account to which all redemption proceeds, dividends, and refunds are credited. Each mutual fund folio must have at least one registered bank account. Multiple bank accounts can be registered with one as 'default.' SEBI mandates that redemption proceeds can only be credited to a KYC-verified, PAN-linked bank account registered with the folio.
The bank mandate is the 'connector' between your bank account and your mutual fund folio. Without it, you can't receive redemption money (where does it go?) or set up auto-SIP. When you first invest in a fund, you register a bank account. All your money comes from and goes back to this account. You can have multiple bank accounts registered and switch between them — but any new account must be verified.
Register primary bank account when creating a folio (KYC + bank proof required).
For SIP auto-debit: register a NACH mandate (eMandate) for the debit account.
For redemptions: proceeds go only to the registered bank account in the folio.
To change/add bank accounts: submit a bank change request with cancelled cheque or bank statement.
SEBI: Third-party bank accounts not allowed — must match PAN-linked account.