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How to Apply For an IPO

Introduction

Businesses need capital for multiple purposes. It can be to fund new projects, pay off debts, or even monetise early investors' stakes. An IPO is one of the most affordable ways for companies to raise funds and fulfil all these needs.

In addition, an IPO can provide excellent opportunities for investors to join in the growth of companies and reap handsome returns. 

But before entering the world of IPOs, you need to fulfil some eligibility criteria and learn about the basics of applying for an IPO. 

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What are the eligibility criteria to apply for an IPO?

You must fulfil the following eligibility criteria to invest in an IPO:

  • You must be an eligible investor approved by SEBI (Securities and Exchange Board of India). As per the current guidelines, NIIs (Non-Institutional Investors), QIBs (Qualified Institutional Buyers), RIIs (Retail Individual Investors), and employees can invest in an IPO
  • You must have a PAN (Permanent Account Number)
  • You must have a trading account and a Demat account 
  • Your Demat account must be linked to your savings or current account
  • To fund your IPO investment, you must have a sufficient balance in your bank account
  • You should create or have an existing UPI ID 

Note: The amount retail investors can invest in an IPO is up to INR 2 lakhs. Investments above INR 2 lakhs are reserved for institutional and non-institutional investor categories. 

How can you apply for an IPO online?

You can apply for an IPO online in two different ways:

Internet banking 

  • Enter your username and password to log in to your net banking account 
  • Click on the ASBA (Application Supported by Blocked Amount) tab 
  • Click “Apply IPO” and select the IPO you want to bid for 
  • Enter your name, PAN, and other details
  • Mention the number of stocks you wish to bid for and the price you are willing to pay
  • Click “Submit”

Note: Bids are accepted on the same day if you submit before 2 pm on a working day. Otherwise, they are accepted on the next day. 

Broker 

  • Visit the broker’s app or website and enter your login information. If you do not have an online account, you need to create an account first
  • Look for the IPO tab and go to the current IPO section
  • Select the company you wish to place a bid with
  • Enter the number of stocks you wish to bid for and select the price you are willing to pay
  • Enter your UPI ID and click “Submit” 
  • Visit the UPI app to approve the transaction
  • Now wait for the notification in the UPI app. Your application money will be blocked until the allotment  

How can you apply for an IPO offline? 

Here’s how you can also apply for an IPO offline:

  • Visit your bank’s nearest branch or a broking firm and fill in the ASBA application form 
  • You also need to provide your KYC details such as PAN, bank account number, and Demat account details 
  • Submit the form at the branch and take the acknowledgement slip
  • Select the IPO you wish to bid for, mention the number of shares and the price acceptable to you 
  • Once your form is uploaded successfully, the amount will get deducted from your account after the shares have been allotted to you (as per the ASBA facility)

Note: You can also download the ASBA e-form from NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) website. 

What is ASBA? 

ASBA is an acronym for Application Supported by Blocked Amount. The application is developed by SEBI to simplify the process of IPO investment. Under the ASBA facility, your application amount is blocked in your bank account, and you cannot use it for any other purpose. The amount is debited from your account only when you are selected for allotment. However, you keep earning interest on it. 

Conclusion 

In the last decade, applying for IPOs has become more straightforward and hassle-free, thanks to the development of technology.  Whether you want to invest in IPOs online or offline, you can follow the above steps and get started. But ensure you have a bank account and a trading and Demat account while meeting all the eligibility requirements. 

At Motilal Oswal, you can open a Demat account instantly online. Visit the website and get started with your investment journey today!

 

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Related articles: 5 Tips for Investing In IPOs | What's the big deal about IPOs | Clearing the confusion from IPOs | IPO in India- The future looks bright | Upcoming IPO

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