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Applying in online IPOs using UPI

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Applying in online IPOs using UPI

How to Use UPI for IPO?

Nowadays, UPI based IPO applications are seen in the market through which an investor can apply in the upcoming IPOs (Initial Public Offering). That’s right! You can apply for an IPO using your UPI ID. The Securities & Exchange Board of India (SEBI) made changes timely and this time the change was regarding application of IPO via UPI. 

Under SEBI’s circular number: SEBI/HO/CFD/DIL2/CIR/P/2018/138 – which was posted on November 1, 2018 stated that: Introduction of the Unified Payments Interface (UPI) as a payment mechanism with Application Supported by Blocked Amount (ASBA) for applications in public issues by retail individual investors through intermediaries (Syndicate members, Registered Stock Brokers, Registrar and Transfer agent and Depository Participants).

UPI was introduced in the IPO process because it would increase efficiency, eliminate the need for manual intervention at various stages, and reduce the time duration from issue closure to listing by up to 3 working days.

You can read the full SEBI circular here.

How to generate a UPI ID?

It is easy to generate a UPI ID on your UPI mobile application; you have to follow the below-mentioned steps:

  1. You have to download a UPI 2.0 enabled mobile application on your mobile phone. Some of the famous UPI apps are Google Pay, Phone Pe, and Paytm, etc.
  2. Fill in the details and register for the UPI ID on the UPI mobile application and link your Bank Account with it.
  3. You will be able to generate a UPI handle (also called UPI PIN), such as okhdfcbank (if you use HDFC bank), and “okicicibank” (if you use ICICI bank).
  4. Now, you can use this UPI PIN to apply IPO on the broker’s website.

You can view the steps given by NPCI to generate UPI ID on the BHIM app here.

How to apply for IPO through UPI ID via Stockbroker’s Application?

You can apply for IPO using UPI ID. Below are the steps for it:

  1. Download your stockbroker’s mobile application on your mobile and login in it.
  2. You have to select the IPO you want to apply for from the list of open issues. Generally, a full-service stockbroker offers all IPOs (Mainline and SME) on its platform, and not a discount brokers.
  3. Cautiously check the details of the offer, like begin date, end date, issue size, lot size, allotment date, and refund date, etc., for the selected IPO.
  4. Enter your UPI ID linked to your bank account.
  5. Place your bid(s) only in the multiples of lot size.
  6. Click on the checkbox for the cut-off price. It solely depends on you if you want to apply at the cut-off price.
  7. For placing a bid at any other price, enter a price in the ‘Price’ field.
  8. Thoroughly check all the details at the end and click submit.
  9. As you click submit option, an IPO application request will be sent to the exchange on your behalf. Your details are verified at the exchange, such as investors DEMAT account details with Depository (CDSL or NSDL).
  10. Next, you will receive a mandate request on your UPI mobile app in few hours. You have to accept the mandate within 24 hours of the request generation.
  11. Now, accept the mandate. This will block the funds required for the application in your bank account until the date of allotment (2 days before the listing date).
  12. If you receive an allotment, the money is debited from your bank account and shares are credited to your DEMAT account.
  13. If you do not receive an allotment, the blocked funds are released on the date of allotment.

Why UPI is Mandatory to apply for IPO?

SEBI made it mandatory to include UPI ID in the IPO process. This is because the UPI option in the IPO process ensures minimal rejections on account of signature, name, and bank account number mismatch.

When the ASBA system was in trend, your signature on the IPO form needed to match with that on the bank’s records. Even a slight mismatch could result in your IPO form getting rejected.

Moreover, it is a paperless transaction and hassle-free process. The travel time also drops drastically as the forms would need to be sent from the syndicate banks (the banks that accept an IPO application) to your own bank branch where you have your savings account. Under the UPI-based application method, when the syndicate banks send you a request to block an amount on your UPI app, your acceptance of the request on the phone (through your UPI app) is considered as proof that you are indeed the same investor who has applied for the IPO through the physical form. This new process of application should also reduce the time between the closure of an IPO and the listing of shares.

Conclusion

According to the SEBI, UPI ID is mandatory to apply for an IPO, and it is advisable to generate a UPI ID before applying for the IPO. You can choose the UPI mobile apps according to your preference. The best UPI app will make you apply IPO most conveniently without any hassle, and the retail investors want this.

Last updated on 9th May 2021

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FAQs

For retail investors, the limit for IPO application is 2 lakh per transaction on UPI.

 

The applicability of UPI as a payment mechanism has been prescribed in a Phased manner as under:

  • Phase I

    From January 01, 2019, the UPI mechanism for retail individual investors through intermediaries will be made effective along with the existing process and existing timeline of T+6 days. The same will continue, for a period of 3 months or floating of 5 mainboard public issues, whichever is later.

  • Phase II

    Thereafter, for applications by retail individual investors through intermediaries, the existing process of physical movement of forms from intermediaries to Self-Certified Syndicate Banks (SCSBs) for blocking of funds will be discontinued and only the UPI mechanism with existing timeline of T+6 days will continue, for a period of 3 months or floating of 5 mainboard public issues, whichever is later.

  • Phase III

    Going forward, the listing time of IPO shares will be reduced to 3 working days from the issue close date using the UPI mechanism.

 

Discount Brokers like Zerodha, Trade Plus are providing a facility to invest online in IPOs using their back-office software and UPI mode of payment.

 

There are no transaction charges applied for using UPI mode of payment. Still, you need to get in touch with your respective bank for details of charges, if any.

 

In case your bank is not providing UPI services for IPO, you have to submit an application through ASBA process of your bank.

 

There is no restriction for you from UPI on the number of applications using the same UPI ID.

 

No. Applications made by retail investors using third party UPI ID or by any category of investors using a third party bank account are liable for rejection.

 

Retail individual investors can withdraw bids till issue closure date. During the bidding period you can approach your broker form for withdrawal.

 

Retail individual investors can withdraw bids till issue closure date. During the bidding period, you can approach the same intermediary to which you had submitted the application form for withdrawal.

 

The collect request from IPO is not fraudulent in case the UPI ID is marked as a “verified merchant”. Please look out for the indication of a Verified Merchant tag when you receive the request on you App for blocking the amount that you have BID in the IPO. The request is received as a collect request on your UPI enabled App. Further also please verify the details including your Bid-cum application number, amount and other bid details received during the collect request.

 

The money will be blocked till the finalization of allotment, post which the amount equivalent to allotted shares would be debited and balance amount (in case of partial allotment) will be unblocked.

 

The status of the active IPO mandate can be viewed in the mandate section of your UPI app.

 

Customer can reach out to www.npci.org.in for the list of Banks available for the IPO Service on UPI.

 

Transaction will be declined in case the account has insufficient funds.

 

No, to apply using UPI, the bank where you hold an account linked to your UPI App also needs to be eligible to act as an Issuer Bank for UPI in the IPO process. The list of such bank is available on website of SEBI.

 

You need to contact your broker for re-initiating the process. You may also like to check whether the UPI ID is correct or not.

 

Nowadays, there are several discount brokers in the market who provide the IPO application process from their mobile application. Discount brokers, such as Zerodha, Paytm Money, Upstox, and 5paisa etc have the facility for the IPO application.

 

No, you cannot generate multiple UPI ID from one mobile number. It is mandatory to have different mobile numbers to generate different UPI IDs.

 


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