A Detailed Guide on How to Apply for an IPO

IPO or Initial Public Offering refers to a process where a private company raises capital by selling its shares to the public. Through this process, a company makes its first offer to the public to subscribe to its shares. For this, companies approach the Securities and Exchange Board of India (SEBI), and after the market regulator’s approval, they proceed to float their public issues.

Read along to get a definite answer to your question of how to apply for an IPO!

Note: Individuals can apply for IPO online and offline. Both the processes are discussed separately.

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How to Apply for an IPO Online?

There are two ways an investor can complete an online IPO application. These are as follows:

1. IPO Application via Broker

Here is a step-by-step guide on the online IPO application process through a broker.

Step 1 - At first, log in to the online account with a broker. Investors who do not have an online account must create an online account by registering their email ID and phone number.

Step 2 - Next, find out the IPO tab and navigate to the current IPO segment. Here, investors need to choose the IPO name from the available current IPO list.

Step 3 - Then, investors have to enter the lot size or number of stocks they want to bid for. Here, they have to choose a bid price. Investors who are willing to increase the chances of IPO allotment must bid at the cut-off price or maximum price at the upper price band.

Step 4 - After that, enter UPI ID and click on submit button. Here, investors have to approve the transaction on the UPI app, and the exchange will approve their bids.

Step 5 - At this stage, investors have to wait for the mandatory notification in UPI app. After receiving the mandate request, investors can successfully submit an IPO application.

Note: The bid amount will be blocked until investors get the share allotment in the IPO.

2. IPO Application via Internet Banking

Follow the steps mentioned below to complete an online IPO application through internet banking.

Step 1 - At first, log in to the Internet banking account with credentials.

Step 2 - Identify ASBA (Application Supported by Blocked Amount) tab and click on it.

Step 3 - Next, click on ‘Apply IPO’. From the available option and the IPO list, select IPO.

Step 4 - At this stage, applicants have to provide their name and PAN. In addition, they have to enter the bid quantity price and click on submit.

Note: If investors submit the bid before 2 pm on a business day, the bid acceptance will occur on the same day. On the other hand, if they submit the bid after 2 pm on a business day, the bid acceptance will be scheduled for the next day.

Now that investors know the online IPO application process, let’s focus on the offline IPO application procedure.

How to Apply for an IPO Offline?

To apply for an IPO offline, follow the steps discussed below.

Step 1 – Visit the nearest branch of a broking firm or bank and fill out the ASBA application form.

Step 2 – Provide KYC details.

Step 3 - Next, funds will be blocked, and the invested amount will be debited once the shares are allotted. For instance, if investors have invested money worth ₹ 4 lakh and got shares worth ₹ 1 lakh, then only ₹ 1 lakh will be debited from their bank account.

Since prospective investors are now aware of the ways to apply for IPO, i.e., both in offline and online mode, let’s learn about the eligibility criteria to qualify for IPO application.

What Are the Eligibility Criteria for IPO Application?

The IPO investment procedure is simple. However, investors must fulfil certain eligibility parameters or conditions to complete an IPO application or investment. These are as follows,

Applicants must be approved investors as per the guidelines set by SEBI (Securities and Exchange Board of India). Till now, four types of investors can apply for IPO. These are Non-Institutional Buyer (NII), Qualified Institutional Buyer (QIB), Employees, and Retail Individual Investor (RII).
Investors must have a Permanent Account Number or PAN.
Investors must have a Demat account and a trading account with any recognised participatory in India.
Bank savings or current account must be linked with the Demat account.
Investors must have enough credit balance to fund the investment or application.

What Do You Need to Apply for an IPO?

To apply for IPO, investors must have the following:

Demat account
Trading account
Bank account and a mobile number linked to the bank account
UPI ID

What Are the Benefits of Online IPO Application?

Here is a list of benefits that investors can enjoy if they take the online route.

Investors can save time as they need to visit a broker’s firm or bank for an IPO application.
The online IPO application process is transparent, and investors have full authority.
Investors can easily complete the process with just a few clicks.
A company can raise funds through IPO, depending on the objective of the company.

While investing in IPO, investors must know certain legal concepts. One such concept is reserved shares. Read on to know about this in detail.

What Are the Reserved Shares in IPO?

Reserved shares are authorised shares that are reserved for issuance in the future. This happens under a stock option plan. Reserved shares are a portion of the total number of authorised shares. However, the corporation cannot issue these unless under the stock option plan.

What Is the Maximum Lot Investors Can Buy in an IPO?

As per the guidelines issued by SEBI, an investor (retail) can bid for shares worth ₹ 2 lakh (maximum) in an IPO.

IPO application benefits investors in many ways. They can increase liquidity, raise money, and ensure diversification. Depending on the application medium (applying through online mode), investors can reap further benefits. Read along!

The above-mentioned sections thoroughly discuss how to apply for an IPO. Choosing between the online or offline IPO application process entirely depends on the discretion of investors. In case they consider applying for IPO through a broker, they must choose an authorised broker. So, before applying for an IPO, conduct in-depth market research and start investing in any preferred application method.

FAQs About How to Apply for an IPO

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Explain one reason for rejecting the IPO application process.

The IPO application process can get rejected if the applicant and used bank account holder is not the same person.

What is the IPO application time?

IPO bidding at the stock exchange is available from 10 am to 5 pm. However, most banks do not provide this facility till 5 pm. on the last day.