Applying for an IPO online through UPI has made the process of investing in public issues much simpler. Instead of transferring the application money immediately, the Application Supported by Blocked Amount (ASBA) mechanism allows the required funds to remain blocked in the investor’s bank account until the allotment process is completed. For eligible individual investors, UPI can be used as the payment mechanism through supported intermediaries and applications.
The process involves selecting an IPO, entering your bid details, providing your UPI ID, approving the UPI mandate and waiting for allotment. Here is how the process works.
What Do You Need Before Applying for an IPO Through UPI?
Before starting your application, keep the following ready:
- An active PAN
- A valid demat account
- A bank account linked to your UPI ID
- A UPI-enabled application or bank supported for IPO mandates
- Sufficient funds in the linked bank account
- A mobile number registered with your bank and UPI service
The bank account used for the UPI mandate should generally belong to the investor. Applications using a third-party bank account or third-party-linked UPI ID can be rejected.
It is also important to check whether your bank and UPI application support IPO transactions before applying.
Step 1: Choose the IPO You Want to Apply For
Start by checking the IPO you are interested in through your broker’s platform, the stock exchange website or the IPO section of your investment application.
Review important information such as:
- IPO opening and closing dates
- Price band
- Lot size
- Minimum investment
- Issue size
- Fresh issue and offer-for-sale components
- Company’s financial performance
- Objects of the issue
- Risk factors
- Valuation and other disclosures
The Red Herring Prospectus (RHP) and other offer documents contain detailed information about the company and the issue.
Do not make an application solely because an IPO is receiving significant attention in the market.
Step 2: Open Your Broker’s IPO Section
Log in to your stockbroker’s mobile application or website.
Look for a section such as IPO, Invest, New Issues or IPO Applications. Select the IPO you want to apply for.
Online IPO applications can be initiated through eligible intermediaries, including registered stock brokers. SEBI’s investor guidance confirms that investors may use a stock broker’s online facility where available.
Step 3: Enter Your IPO Application Details
After selecting the IPO, the application page will generally ask for information such as:
- Investor category
- Number of lots
- Bid quantity
- Bid price
- PAN details
- Demat account information
- UPI ID
The exact screen and terminology may differ between brokers.
If the IPO uses a price band, you will generally have to enter your bid within the permitted range. Some applications may provide a cut-off price option where applicable for eligible investors.
Before submitting, carefully check your quantity, price, PAN, demat details and UPI ID.
Step 4: Enter Your UPI ID
Enter the UPI ID linked to the bank account from which the IPO funds will be blocked.
This step is important because the UPI mandate will be sent to the relevant UPI application for authorisation.
SEBI’s IPO guidance states that investors provide their UPI ID to the intermediary, after which the request to block the bid amount is received through the investor’s UPI application. The investor must authorise the mandate using the UPI PIN.
Step 5: Submit the IPO Application
After reviewing the details, submit the application.
Your broker or intermediary sends the bid information through the applicable IPO system. The UPI details are used to initiate the mandate request for blocking the required amount.
At this stage, the money is not necessarily debited from your account immediately. Instead, the specified amount is blocked under the ASBA mechanism.
This means you normally continue to hold the funds in your bank account, but the blocked amount cannot be freely used until the IPO process determines whether it is required for allotment.
Step 6: Approve the UPI Mandate
After submitting the application, you should receive a UPI mandate request in your UPI application.
Open your UPI app and carefully verify:
- IPO or issue-related details
- Amount being blocked
- Bank account
- UPI mandate information
If the information is correct, approve the mandate using your UPI PIN.
The UPI PIN should never be shared with anyone. A legitimate IPO application process does not require you to disclose your UPI PIN to a broker, caller or other person.
SEBI specifically states that the investor needs to enter the UPI PIN to accept the mandate request for blocking the funds.
Step 7: Check Whether the Funds Are Blocked
After approving the mandate, check the status of your IPO application through your broker or the relevant IPO platform.
A successful application requires the applicable mandate to be accepted and the funds to be blocked.
Investors should not wait until the last few minutes of the IPO bidding period to approve the mandate. NSE’s current issue information pages advise investors to submit UPI applications well in advance because technical or system-related issues could prevent successful mandate confirmation.
The applicable UPI mandate deadline can vary according to the issue and current rules, so investors should always check the specific IPO’s official issue information.
Step 8: Wait for IPO Allotment
Once the IPO closes, the registrar processes applications and determines the basis of allotment according to the applicable rules.
If shares are allotted to you, the required amount is debited from the blocked funds and the shares are credited to your demat account.
If you receive no allotment, the blocked amount is released according to the applicable process.
If the IPO is heavily oversubscribed, applying for more lots does not necessarily mean that you will receive more shares. Allotment depends on the applicable category-wise allocation and allotment rules.
Step 9: Check Your Allotment Status
After the allotment process, you can check your application status through the registrar’s official website or other permitted channels.
You may need details such as:
- PAN
- Application number
- Demat account details
The shares, if allotted, should subsequently appear in your demat account.
Common Mistakes to Avoid While Applying Through UPI
Several mistakes can cause an IPO application to fail or be rejected.
Using Someone Else’s Bank Account
Avoid using another person’s bank account or UPI ID. Third-party applications can be rejected under the applicable IPO rules.
Entering the Wrong UPI ID
A typing error can prevent the mandate from reaching the correct account. Always verify the UPI ID before submitting.
Forgetting to Approve the Mandate
Submitting the IPO application is not the final step. The UPI mandate must also be accepted within the applicable deadline.
Insufficient Funds
The required amount must be available in the linked bank account when the mandate is processed.
Applying at the Last Minute
Technical problems, delayed mandate notifications or banking issues can prevent successful completion. NSE advises investors to apply early rather than waiting until the final deadline.
Can You Cancel or Modify an IPO Application?
The ability to modify or cancel an application depends on the applicable issue rules and the stage of the bidding period. Where permitted, modifications should be made before the IPO closes.
Once the relevant deadline has passed, changes may not be possible. Therefore, carefully verify the application before submitting it.
Is Applying Through UPI Safe?
UPI-based IPO applications operate within the regulated ASBA framework and can be convenient because the application amount is blocked rather than immediately transferred to the issuer.
However, investors should use only official broker, bank or intermediary platforms. Never share your UPI PIN, OTP or banking credentials with anyone claiming to be an IPO representative.
Also verify the IPO details before approving any mandate request.
Conclusion
Applying for an IPO online through UPI is a relatively straightforward process. You select the IPO through your broker, enter your bid and UPI details, submit the application, approve the UPI mandate and ensure that the required funds are successfully blocked.
After the IPO closes, the registrar determines allotment. If shares are allotted, the applicable amount is debited and the shares are credited to your demat account. If there is no allotment, the blocked funds are released.
The most important points are to use your own eligible bank account and UPI ID, maintain sufficient funds, verify every application detail, approve the mandate before the applicable deadline and never share your UPI PIN. IPO investing still carries market and business risks, so completing the application correctly is only one part of making an informed investment decision.