Applying for an IPO is a great way to invest in companies at an early stage of their public journey. But before you apply, it’s essential to understand the IPO process, the investment categories, and the correct application methods.
Understanding the IPO Application Process
Before applying:
Research the company: Read the Red Herring Prospectus (RHP), study the business model, financials, and risk factors.
Choose the application method: You can apply either offline (physical form) or online (through your broker or bank).
The mode of application does not affect your chances of allotment. All bids are pooled and processed uniformly.
Investor Categories in an IPO
IPO applications are divided into 3 investor segments:
Retail Individual Investors (RIIs)
Investment limit: Up to ₹2 lakhs
Allotment method: Proportionate with preference for small lot sizes to maximize participation
Non-Institutional Investors (NIIs)
Investment: Above ₹2 lakhs
Includes High Net-Worth Individuals (HNIs)
Allotment: Proportionate basis, often competitive due to oversubscription
Qualified Institutional Buyers (QIBs)
Mutual funds, banks, insurance companies, etc.
Not relevant for retail applicants
Tip: If you’re investing ₹2 lakhs or less, apply as a retail investor to benefit from better allotment chances.
Applying for a Book-Built IPO: Key Aspects
1. Offline vs. Online Application
Offline: Fill out a physical IPO form, submit it via your bank or broker.
Online: Login to your broker’s trading platform or bank’s net banking portal (via ASBA). It’s faster, safer, and error-free.
2. Bidding Price: Use Cut-Off Option
If unsure about what price to bid, select “Cut-Off Price.”
This means you agree to accept the final discovered price, ensuring your bid is considered.
If you bid lower than the cut-off, your application may get rejected.
3. Retail vs. HNI Application
Mention the correct quota: Retail (≤ ₹2 lakhs) or HNI (> ₹2 lakhs).
Applications are categorized based on the investment amount—not based on what you select in the form.
4. Fill Accurate Bank & DP Details
Ensure your bank account, PAN, and demat account details are correctly filled.
Mistakes in these details can lead to rejection or missed allotments.
5. Don’t Delay Your Application
Avoid last-minute applications—especially in popular IPOs.
Brokers and banks may stop accepting bids hours before the official cut-off.
3 Small but Crucial Things to Remember
1. Form Completion (Offline Only)
Every field must be completed properly.
Signatures must match bank and DP records—mismatches can lead to rejection.
2. ASBA Facility
ASBA (Application Supported by Blocked Amount) is mandatory for retail investors.
It blocks the application amount in your bank account until allotment.
If you get shares: the blocked amount is debited.
If not: the block is automatically released—no refunds or delays.
3. Bid Cancellation/Modification
You can cancel or modify your IPO bid anytime before the cut-off time.
This allows flexibility if you want to change the quantity or switch to cut-off pricing.
Final Tips Before You Apply
Always read the prospectus and research the company before investing.
Use online platforms for convenience and faster processing.
Apply early during the IPO window to avoid last-minute issues.
Keep track of allotment results and ensure funds are available for potential allotment.
