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Today, UPI is the most preferred way as you can invest in an IPO online through UPI within seconds using your smartphone, no matter where you are. UPI payment gateway blocks the IPO bidding amount in your bank account which gets debited or released back based on successful or no allotment.
Earlier the IPO application process was cumbersome as one has to submit documents to invest in an IPO. Later in 2019, SEBI made the process quite easier with the launch of a based IPO application process. While investing in an IPO with UPI, you do not need to physically present at bank branches to fill and submit paper-based IPO forms.
Want to subscribe to an IPO, here is a complete guide on how to apply for an IPO using a UPI payment gateway, who can use UPI to invest in an IPO, maximum UPI transaction limit, and more.
UPI stands for Unified Payment Interface developed by the National Payment Corporation of India (NPCI) in association with RBI. UPI virtual payment is an instant real-time payment method that facilitates inter-bank transactions and settlement.
One can use UPI as a payment gateway to transfer money from one bank account to another instantly in real-time. It is a unique virtual payment address for every UPI user.
While applying for an IPO, you can use UPI ID and the process blocks funds in your bank account till allotment. Once the allotment is declared and if you get an allotment, your bank account will be debited for the blocked funds or in case of no allotment, blocked funds will be unfrozen or released back.
Now, the question is who can make an IPO bid using UPI.
An IPO can have different types of investors such as retail investors (RII), non-institutional investors (NIIs), high-net-worth individuals (HNIs), and qualified institutional investors (QIBs). And, the IPO bidding amount is different for each category of applicant.
Those who place a maximum IPO bid of Rs 2 lakh are categorized as retail individual investors (RII) while bidders who want to invest above Rs 2 lakh are called HNIs or NIIs.
Earlier, only retail investors were allowed to make an IPO bid using UPI ID because as per NPCI, the maximum fund transfer limit for UPI is Rs 2 lakh.
But later in April 22, SEBI revised the maximum UPI transaction limit from Rs 2 lakh to Rs 5 lakh. Post revised limit, HNIs were also permitted to make an IPO bid through UPI.
HNIs and NRIs who want to invest upto Rs 5 lakh in the NII category are also permitted to use UPI while applying for an IPO online. All IPO applications placed for bidding amounts exceeding Rs 2 lakh are automatically considered in the NII category.
However, HNI applicants above Rs 5 lakh and QIB investors can subscribe to an IPO only through the ASBA net banking process.
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.
Thanks to an IPO application with the UPI method which takes less than a minute to submit an IPO bid.
Interested investors who have a UPI ID on their net banking app or any BHIM UPI app can apply in an IPO online with their stockbroker’s platform.
Steps to invest in an IPO with UPI;
Zero charges, yes, applying in any IPO with UPI payment is absolutely cost-free.
Neither your broker charges any brokerage fee nor are there any charges applicable to accept the UPI mandate request.
The cut-off time is the maximum time allowed for investors to submit their IPO applications.
The IPO bidding time for all categories of IPO investors starts from 10 AM on the issue opening date. This means, willing investors can place an IPO bid from 10 AM onwards.
If you are a retail investor who does not invest more than Rs 2 lakh in an IPO, you can bid by 5 PM on the issue closing date and the UPI mandate is also to be approved by 5 PM. Retail investors can also modify and cancel their IPO bids before the cut-off time which is 5 PM.
However, the cut-off time for NII category is 4PM on the last day of bidding. This means any bidder in the NII/HNI category must submit their IPO bids by 4 PM when the issue closes for subscription.
SEBI has put some restrictions on NII investors as they are not permitted to bid at the cut-off price. Moreover, they cannot cancel their IPO bids however, modification at an upper price is allowed.
If an investor in the NII category has invested Rs 2.5 lakh in an IPO, he/she can revise the bid to Rs 3 lakh but cannot place a bid for a lower amount than the original bid of Rs 2.5 lakh.
Although one can subscribe to an IPO by the cut-off time it is also advised to submit IPO applications an hour before the cut-off time to avoid last-minute rejection.
In April 2022, capital market regulatory authority SEBI announced the maximum per transaction limit in UPI to Rs 5 lakh which was earlier Rs 2 lakh. An IPO investor (retail and HNI category) can now use UPI to make IPO applications upto Rs 5 lakh.
However, any NII bidder who wants to place a high bid for more than Rs 5 lakh should apply for an IPO through ASBA process.
UPI mandate is a fund block request or commitment towards payment of a specified amount to your payment service provider.
In the UPI UPI-based IPO application process, the bidder provides the virtual payment address (UPI ID) linked with the same bank account that is mapped with their trading account. Once an IPO order is placed, the system sends a mandate or payment request on the UPI app that needs to be approved to authorize your bank to block funds to the extent of the IPO bidding amount.
Steps to accept UPI mandate on UPI app;
UPI mandate needs to be approved before 5 PM on the issue closing day. Once you have authorized the UPI mandate for payment, you cannot modify it. To do so, you have to cancel or delete an existing IPO order and submit a new IPO bid.
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For retail investors, the limit for IPO application is 2 lakh per transaction on UPI while HNIs can place an IPO bid for maximum of Rs 5 lakh.
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.
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 the same intermediary to which you had submitted the application form for withdrawal.
The status of the active IPO mandate can be viewed in the mandate section of your UPI app.
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.
Generally, UPI mandate is sent within 1-2 hours but if you did not receive mandate yet, cancel your IPO order placed and place a new IPO order. UPI mandate must be approved before the cut-off time on the issue closure date otherwise, it will be automatically expired.
Yes, given the maximum UPI limit of Rs 5 lakh, HNI investors with a bidding amount up to Rs 5 lakh can use UPI to invest in an IPO. Thus, HNI can now purchase IPO stocks with discount brokers like Zerodha, Upstox, Groww, etc.
Any HNI IPO application above Rs 5 lakh can be made through the ASBA process only where you need to either access net banking account or submit physically signed forms.
All refunds of blocked amount get processed on the allotment day.
If an investor do not receive share allotment or gets partial allotment (shares allotted is less than shares applied for), funds will be released to your bank account.
If in any circumstances, funds are not unblocked on the allotment, it will be refunded or released before the mandate expiry period. You may also reach out to your bank for release of blocked amount.
No, SEBI allows only one IPO application per PAN. An investor can place only 1 IPO order using UPI in either retail or NII category (upto Rs 5 lakh).
If you make two orders, both these applications will be rejected as it is not valid.
An investor can place a maximum IPO bid of not more than Rs 5 lakh using the UPI payment gateway. However, if you want to bid for above Rs 5 lakh, you can do it through the ASBA process. In this, you can either make an IPO application using your net banking account or submit a physical ASBA application form.
Yes, eligible employees can purchase an IPO for an amount not exceeding Rs 5 lakh through UPI. Employees can place IPO bid under the employee quota or retail category.
