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.
It is easy to generate a UPI ID on your UPI mobile application; you have to follow the below-mentioned steps:
You can view the steps given by NPCI to generate UPI ID on the BHIM app here.
You can apply for IPO using UPI ID. Below are the steps for it:
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.
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
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:
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.
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.
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.
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.
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.