Process or steps to apply in IPOs through Broker’s website using UPI.
According to the new mandate from SEBI (phase II onwards), since July 2019, retail individual investors (RII) submitting application form through intermediaries i.e. Syndicate Member or Registered Stock Brokers or Registrar and Transfer or Depository Participants have to necessarily use UPI as a payment mechanism. (SEBI Circular )
This is to streamline the process of applying in IPOs, recently the SEBI has now made it mandatory for all IPOs to be supported by UPI 2.0. With this, now the retail investor can use UPI ID for blocking the funds while subscribing for IPO online on NSE and BSE and directly apply through the broker’s website. You can check the list of apps and banks which support UPI IPO currently on NPCI's website here.
The Unified Payments Interface (UPI) is an instant smart-phone enabled inter-bank electronic fund transfer service available through your bank. It is developed by the RBI regulated entity “National Payment Corporation of India (NPCI).” It allows inter-bank transfer of money between any two bank account without even adding payee to your account. It can now be used for blocking money for IPO Applications.
UPI ID is a unique identifier like email id created by you which is mapped to your bank account and can be used to send or receive payments in BHIM / UPI system. You can create UPI ID by login on to your account in your bank's mobile App and then click on UPI and register a UPI ID of your choice.
UPI ID or Virtual Payment Address is to be created with SCSBs eligible to act as an Issuer Bank. The list is there on the SEBI website. It can be created by either of the following ways.
The list of apps where you can create UPI ID is provided here. For updated list, please check (SEBI website). The banks that you want to have UPI ID for but do not have UPI enabled app can use BHIM app. Thus you can create UPI ID with all other SCSBs with the help of BHIM App.
The prerequisites to get UPI ID are:
Last updated on 10th Oct 2019
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.