The investment field is still new for some people, and they have many unanswered questions that originate in their minds. The most common confusion for users is- “How is my money transferred from my bank account to the Mutual Fund?” And some are also clueless about the timelines involved, which causes a lot of confusion.
A friend of yours initiated an investment through Sqrrl on a Thursday evening, but their account was debited on Monday. Meanwhile, another friend submitted redemption requests on Monday morning, and saw their accounts credited at 10AM on Tuesday.
It isn’t rocket science to guess that you’ll be confused after such contradictory situations. We are going to spell out the entire process in detail, so you know exactly what to expect and when.
1. At the time of investment
You can invest through three different modes of payment on Sqrrl – Net Banking, Debit Card and NACH Mandate. When you execute transactions through these modes, your money reaches the Mutual Funds with slightly different timelines. Irrespective of how you invest, your money is always safe, because the money is never held in Sqrrl’s bank accounts.
After all, you are trusting us with your hard earned money, and we know its value.
a. Net Banking
When you choose the Net Banking option you’ll be redirected to your bank’s net-banking portal. This happens via a RBI-approved payment gateway appointed by Sqrrl. Here, you can securely login to your bank’s Net Banking portal and make the payment. Just like any other e-commerce transaction.
The money will be debited from your account as soon as you pay through net banking. You’ll also receive an alert from your bank if you have SMS/email alerts set up. You’ll see the debit transaction listed in your bank statement as a debit to the payment gateway (not to the Mutual Funds).
The actual allotment of Mutual Fund units happens either on the same day (if the payment was made before a certain cut-off time,usually 3PM, on a business day) or on the next business day (if the payment is made after the cut-off time, or on a non-business day).
Once the Mutual Fund Company has executed your investment (i.e. you have been allotted Mutual Fund units), it will communicate the transaction confirmation to Sqrrl on the next business day. We’ll update your Sqrrl dashboard on the same day that the AMC sends us the transaction confirmation.
Each individual Mutual Fund will then send you a transaction confirmation, via email and/or SMS, with details of Investment Amount, Units Purchased, and the corresponding Net Asset Value (NAV) within 5 business days after executing the transaction.
b. NACH Mandate
A NACH mandate is a form that authorizes Sqrrl to request your bank to debit your account on your behalf for the transaction amount requested by you. This mandate is necessary if you want to setup a Systematic Investment Plan (SIP). It works similarly to the authorization you give a bank to auto-debit monthly EMIs from your account for, say, a home loan repayment.
When you invest through an NACH mandate (whether lump sum or for monthly SIP), Sqrrl, through its RBI-approved payment processor, sends a debit request to your bank. Again, even if there are multiple Mutual Fund investments, there is a single, consolidated debit from your bank account.
Your account will be debited on the business day after the request is sent to your bank. Mutual Fund units will be allotted according to the NAV for the day that the Mutual Fund processes your investment. However, if your investment amount is greater than Rs. 2 Lakh, the allotment of Mutual Fund units may take an additional business day.
Monthly SIPs work slightly differently. To execute the SIP on the scheduled date, Sqrrl sends a debit request to your bank one business day before the SIP date.
For example, if you have setup your SIP investments to execute on the 7th of every month, Sqrrl will forward the debit request to your bank on the 6th (assuming the 6th is a business day), so that your account gets debited on the 7th.
We’ll update the investment on your Sqrrl dashboard on the same day that the AMC sends us the transaction confirmation. Each individual Mutual Fund will also directly send you a transaction confirmation, via email, with all details within 5 business days after executing the transaction.
c. Debit cards
When you choose the Debit Card option, you’ll have to fill in your card details on the payment gateway page. Here, you can securely enter the One Time Password (OTP) sent to your mobile by your respective bank. It is the simplest among all other e-commerce transactions.
The money will be debited from your account as soon as you pay through debit card, and you will receive an alert from your bank if you have SMS/email alerts set up. You will see the debit transaction listed in your bank statement as a debit to the payment gateway (and not to the Mutual Funds).
We’ll update the investment on your Sqrrl dashboard on the same day that the AMC sends us the transaction confirmation.
2. At the time of redemption/withdrawal
Whenever you initiate a request to redeem (withdraw) your investments with Sqrrl, the Mutual Fund transfers the money directly into your bank account currently listed with it. If you change your bank account in your Sqrrl account, we communicate this change to the Mutual Fund on your behalf. Any future withdrawals will be received in the updated account.
Once you initiate the redemption request, the credit will be received in your account in 1-5 business days. This is based on the time of day you submitted the transaction, and the type of Mutual Fund.
If the redemption is initiated before a certain cut-off (usually 1PM) on a business day, the AMC will process your request on the same day. If it’s initiated after the cut-off, your request will be processed by the AMC on the next business day.
For example. If you initiate redemption at 4PM on Monday, it’ll be processed by the AMC on Tuesday. This happens since 4PM is after the cut-off time. Correspondingly, your Mutual Fund units will be redeemed as per the NAV on August 9.
Your money will be credited to your account 1-5 business days depending on the type of Mutual Fund. This happens after the redemption request is processed by the Mutual Fund. For debt Mutual Funds, this time period is usually 1-2 business days. While in the case of equity Mutual Funds, it takes between 3-5 business days.
All redemption transactions will reflect in your bank statement as a credit from the respective Mutual Fund.
We hope you were able to follow all the steps in the chain. It’s long and excruciatingly detailed, but to Bring Your Own Dreams, and to Save & Earn simultaneously, this detailing was absolutely necessary!