In the world of the Indian share market, if Retail Investors are the small General Class passengers and QIBs (Banks/Mutual Funds) are the Business Class, then Non-Institutional Investors (NII) are the First Class travelers. They are wealthy individuals or groups who have more money to invest than a regular person but aren't massive financial institutions like LIC or HDFC Bank.

Commonly known as HNIs (High Net-worth Individuals), these investors play a huge role in an IPO’s success. When you see news that The HNI portion was subscribed 50 times, it means the big players are very excited about the company. In 2026, the rules for this category have been refined to ensure that even smaller HNIs get a fair chance to participate alongside the big HNIs.

Who exactly is a Non-Institutional Investor?

An NII is any investor (Individual, Company, or Trust) who applies for more than ₹2,00,000 in an IPO.

The Quota: Generally, 15% of the total IPO shares are reserved for this category.
No Cut-off Bidding: Unlike retail investors, NIIs cannot bid at the Cut-off Price. They must manually enter the exact price they are willing to pay within the price band.
No SEBI Registration: Even though they invest large sums, they do not need to register with SEBI as professional institutions do.

Who falls into this category?

High Net-worth Individuals (HNIs): Wealthy individuals and family offices.
Resident Indian Companies: Private companies investing their surplus cash.
NRIs & HUFs: Non-resident Indians and Hindu Undivided Families applying for >₹2 Lakh.
Trusts & Societies: Organizations looking to grow their corpus.

The Two Sub-Categories of NII (sNII vs bNII)

In 2026, the NII quota is divided into two separate buckets to make the allotment fairer.

Category

Also Known As

Application Amount

Share of NII Quota

Small NII (sNII)

Small HNI

₹2 Lakh to ₹10 Lakh

1/3rd (approx. 5%)

Big NII (bNII)

Big HNI

Above ₹10 Lakh

2/3rd (approx. 10%)

2026 Rules for NII Allotment

The way NIIs get shares is very different from retail. While Retail is mostly a Lottery, NII is Proportional Allotment.

Proportional Rule: If the NII category is subscribed 10 times, an investor who applied for 1,000 shares will receive 100 shares.
Full Payment: 100% of the application money must be blocked via ASBA. There is no partial payment or margin funding allowed through the application itself.
Withdrawal: NIIs have the flexibility to withdraw their bid before the final allotment is completed, which is helpful if market sentiment suddenly turns negative.

Advantages & Disadvantages of NII Category

Advantages:

No Upper Limit: You can invest ₹50 Lakh or ₹5 Crore; there is no maximum cap like the ₹2 Lakh limit in Retail.
Higher Allocation: In a good IPO, you often get a larger number of shares compared to a single retail lot, provided you have the capital.
Market Influence: Strong NII subscription often acts as a green signal for other investors that the listing might be strong.

Disadvantages:

No Retail Discount: If a company offers a ₹5 discount to retail investors, NIIs usually do not get this benefit.
High Capital Risk: Since the investment amount is large, any fall in the stock price after listing can lead to significant financial loss.
Locked Funds: Large sums of money (often in lakhs) stay blocked in the bank account for 3-4 days during the IPO cycle.

Frequently Asked Questions (FAQs)

Can I apply in both Retail and NII categories?

No. You can only apply in one category per IPO using one PAN card. If you apply in both, your applications will be rejected.

Is it better to apply as a Small NII or a Big NII?

It depends on your budget. Big NIIs (above ₹10L) have a larger share of the quota (2/3rd), but the competition is also among wealthier investors.

Do NIIs get guaranteed allotment?

Not always. If the NII portion is massively oversubscribed, the proportional allotment might result in very few shares, or sometimes none if the application size is too small.

Can an NRI apply as an NII?

Yes, NRIs can apply in the NII category as long as their application amount exceeds ₹2 Lakh and they use an NRE/NRO account.

Why is there no Cut-off Price option for NIIs?

SEBI wants large investors to actively participate in Price Discovery. By not allowing cut-off, it forces NIIs to decide what they think the share is truly worth.

What happens if the IPO is under-subscribed?

If the NII portion is not fully filled, the shares might be diverted to other categories (like QIB or Retail) depending on the IPO rules.

Can I use UPI for an NII application of ₹10 Lakhs?

In 2026, UPI limits have been increased for IPOs, but many banks still have a ₹5 Lakh limit. For applications above that, it is safer to use Net Banking ASBA.

Is the NII allotment also T+3?

Yes. The entire IPO cycle, including NII allotment and refunds, follows the T+3 timeline in 2026.

Can a Partnership Firm apply in the NII category?

Yes, partnership firms and corporate bodies are eligible and frequently apply under the NII/HNI category.

Do NIIs have a Lock-in period?

For Mainboard IPOs, regular NIIs usually do not have a lock-in period and can sell their shares on the listing day. However, SME IPOs may have different rules.

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