How to Apply for an IPO: A Step-by-Step Guide

Applying for an IPO in India is a straightforward process once you understand how the system works. You need a demat account, a bank account linked to ASBA or UPI, and a PAN card. The entire process can be completed online in a few minutes, and your money stays in your account until shares are actually allotted to you.

This article is for educational purposes only and should not be treated as investment advice. Investors should consult an independent financial advisor before making investment decisions.

What are the steps to apply for an IPO?

Before you apply, you need three things in place: an active demat and trading account, a PAN card, and a bank account that supports ASBA or UPI payments. Once these are ready, the process follows a clear sequence.

• Log in to your broker's app or net banking portal.
• Navigate to the IPO section and select the IPO you want to apply for.
• Enter your bid quantity and price. If you are unsure about the price, select the cut-off price option.
• Choose your payment method, either ASBA or UPI.
• Submit your application. Your bank will block the required amount in your account.
• Wait for allotment. If shares are allotted, the blocked amount is debited, and shares are credited to your demat account. If not, the block is released automatically.

Shares are typically listed on the exchange within three working days of the IPO subscription period closing, in line with SEBI's T+3 listing timeline.

What is the ASBA process?

ASBA stands for Application Supported by Blocked Amount. It is the mandatory payment mechanism for all IPO applications in India, introduced and regulated by SEBI. When you apply through ASBA, the required amount is not debited from your bank account immediately. Instead, it is blocked and remains in your account, continuing to earn interest, until the allotment process is complete.

If shares are allotted to you, only the applicable amount is debited at that point. If you do not receive an allotment, the block is automatically released, usually within two working days of the IPO closing. This means you never lose access to your money during the waiting period, and there is no refund process to worry about.

All three investor categories, retail investors, qualified institutional buyers, and non-institutional investors, are required to use ASBA as per SEBI regulations.

How do I apply for an IPO using UPI?

UPI-based IPO applications are available to retail investors applying through a broker or trading platform. The UPI limit for IPO applications is set at Rs 5 lakh per transaction, which comfortably covers most retail applications.

Here is how it works. After placing your bid through your broker's platform, you will receive a payment mandate request on your UPI app. Open the app, review the mandate details, and approve it. Once approved, the amount is blocked in your linked bank account. The process is fully digital and takes less than a minute to complete after your bid is submitted.

If you apply directly through your bank's net banking portal, you will go through the ASBA route instead. Both routes result in the same outcome: funds are blocked, not debited, until allotment is finalised.

What is the cut-off price in an IPO application?

IPOs in India are typically offered within a price band, for example, between Rs 400 and Rs 420 per share. You can either bid at a specific price within that band or choose the cut-off price option.

Selecting a cut-off price means you are willing to pay whatever final price the company sets within the band. For retail investors, this is often the simpler and more practical choice, as it ensures your application remains valid regardless of where the final price is set. The blocked amount in your account is calculated at the upper end of the price band when you apply, and any excess is unblocked after allotment if the final price is lower.

How many lots can I apply for?

IPO applications are made in lots rather than individual shares. Each company sets a minimum lot size, and you can apply for one or more lots up to a defined maximum for retail investors.

For most mainboard IPOs, retail investors can apply for a maximum application value of Rs 2 lakh. This means the number of lots you can apply for depends on the lot size and price band of that specific IPO. Applying for more than Rs 2 lakh in a single IPO shifts your application from the retail category to the non-institutional investor category, which has different allotment rules.

One important rule: only one application per PAN card is permitted per IPO. Submitting multiple applications under the same PAN, even through different brokers, will result in automatic rejection of all your applications for that IPO.

If you are new to IPOs and want to understand how to evaluate which ones are worth applying for, the Chola Securities IPO evaluation framework is a useful starting point before you begin applying. You can also explore upcoming IPOs and track live subscription status directly on Chola Securities.

Final thoughts

Applying for an IPO is a simple process once you have the right accounts in place and understand how ASBA and UPI work. The key things to remember are: apply at the cut-off price if you are unsure, submit only one application per PAN, and ensure your bank account has a sufficient balance to cover the blocked amount.

If you are ready to start, you can open a demat and trading account and apply for upcoming IPOs through the Chola Securities KYC portal.

Disclaimer: Cholamandalam Securities Limited (CSEC) is a SEBI-registered stock broker and depository participant. CSEC does not provide investment advisory services. Investors are advised to consult an independent financial advisor before taking any investment decisions.