IPO Application with UPI

Use UPI to securely and swiftly apply for IPOs. For a flawless experience, follow these simple steps.
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3 mins
21-Oct-24

Understanding UPI for IPO applications: A comprehensive guide

The introduction of the UPI mechanism for IPO applications has revolutionised the process. It has transformed the way investors participate in Initial Public Offerings (IPOs). The Unified Payments Interface (UPI) allows investors to apply for IPOs using a streamlined, digital process that simplifies the traditional methods. Retail investors can apply for IPOs by linking their bank accounts with UPI IDs. This mechanism eliminates the need for physical forms and checks. This innovation not only makes the application process faster but also enhances the security and reliability of financial transactions. By integrating the UPI system into the IPO application process, investors gain a significant advantage. This allows for real-time fund blocking through the ASBA (Application Supported by Blocked Amount) facility. This guide explores how the UPI mechanism works in IPO applications, detailing its process, benefits, and regulatory guidelines.

UPI mechanism for IPO application

The UPI mechanism for IPO applications provides a seamless and efficient way for investors to subscribe to public offerings. Unlike traditional methods that require filling out lengthy forms and issuing checks, UPI allows applicants to block funds in their bank accounts. The funds remain in the account without being transferred until the IPO allotment process is is completed. Here is how it works:

  • Select the IPO: Investors choose the desired IPO that they wish to apply for. They then initiate the application process through a registered brokerage platform or financial institution.
  • Enter UPI ID: During the application process, the investor must provide their UPI ID, linking their bank account to the IPO application. This ID is crucial for processing transactions securely and efficiently.
  • Authorise payment: After submitting the application, the investor receives a mandate request on their UPI-enabled application. By accepting this request, they authorise the blocking of funds in their bank account.
  • Fund blocking: The ASBA facility ensures that the required funds are reserved in the investor's account without an actual debit. This provides security and flexibility until the IPO allotment is finalised.
  • Allotment and release: Once the IPO allotment is determined, the blocked amount is either debited for successful allotments. For unsuccessful bids, the amount is released back to the investor, providing a hassle-free experience.
By leveraging UPI for IPO applications, investors benefit from a faster, more secure process. This approach also aligns with modern digital payment trends, offering a user-friendly experience.

IPO UPI process

The IPO UPI process is a straightforward method that simplifies the application process for investors. Here is a detailed step-by-step guide:

  • Choose the IPO: Select the IPO that you want to apply for from your brokerage's platform.
  • Fill application details: Enter the number of shares and the price at which you wish to bid.
  • Enter UPI ID: Provide your UPI ID linked to your bank account for secure payment processing.
  • Submit the application: Complete the application by submitting the form through the broker's platform.
  • Receive UPI mandate request: Accept the mandate request sent to your UPI app to authorise fund blocking.
  • Fund blocking: The application money is blocked in your account, ensuring funds are available for allotment.
  • Wait for allotment: If shares are allotted, the blocked amount is debited. Otherwise, it is released back to your account.
  • Receive confirmation: Post-allotment, receive confirmation from the exchange and broker about the status of your application.
The UPI payment process ensures that the entire transaction is handled digitally. Thus, reducing paperwork and increasing the speed and efficiency of IPO applications.

IPO UPI ID

The IPO UPI ID is a vital component of the IPO application process. It serves as a unique identifier that links an investor's bank account with their IPO application. This UPI ID acts as a bridge between the investor and the financial institutions involved in processing the application. The creation and use of a UPI ID involve a few simple steps:

  • Creation: To create a UPI ID, the investor needs to download a UPI-enabled app and link it to their bank account. By following the app's instructions, they can set up a unique UPI ID.
  • Usage: Once the UPI ID is created, it can be used during the IPO application process. When prompted, the investor enters the UPI ID, allowing the system to communicate with their bank for fund blocking and authorisation.
  • Security: The UPI ID ensures that sensitive information, such as bank account numbers, is not exposed during transactions. This provides an additional layer of security.
  • Convenience: Investors can quickly complete IPO applications using the UPI ID without the hassle of manual payment methods. This offers a convenient and efficient experience.
The IPO UPI ID streamlines the application process. It makes the process more accessible and secure for retail investors looking to participate in public offerings.

UPI IPO limit

The UPI IPO limit refers to the maximum amount that an investor can apply for through UPI in an IPO application. Here are the key points related to UPI IPO limits:

  • Retail limit: Retail investors can apply for IPOs up to Rs. 2,00,000 using UPI, aligning with the SEBI guidelines for retail participation.
  • ASBA facility: The Application Supported by Blocked Amount (ASBA) ensures that the application amount remains blocked in the investor's account until the allotment process is complete. This provides security and compliance with regulations.
  • Daily transaction limit: Some banks and UPI apps may impose a daily transaction limit on UPI payments. This limit can affect the maximum bid amount in an IPO application.
  • Flexibility: UPI allows investors to apply for multiple IPOs simultaneously, provided the total application amount does not exceed the prescribed limits.
  • Regulatory compliance: Investors must adhere to the regulatory guidelines and limits set by SEBI and financial institutions to ensure compliance and successful application.
By understanding the UPI IPO limits, investors can make informed decisions and participate effectively in public offerings.

UPI IPO time

The UPI IPO time refers to the timeline and duration of the IPO application process when using UPI as the payment method. Here is how it typically works:

  • Application period: IPO applications are open for a specific period, usually 3-5 days, during which investors can submit their bids using UPI.
  • Mandate acceptance: Upon submitting the application, investors receive a UPI mandate request. They must accept this request within the specified time frame, often before the IPO closing date.
  • Allotment announcement: Post-application, the IPO allotment is announced within a few days, determining the successful applicants.
  • Fund blocking and release: The application amount is blocked in the investor's account during the IPO period. Funds are either debited for successful allotments or released back for unsuccessful bids.
  • Final settlement: Once allotment is completed, the shares are credited to the investor's demat account, and the transaction is finalised.
Understanding the UPI IPO timeline helps investors manage their applications effectively and ensures a smooth participation process in public offerings.

IPO UPI rules

The IPO UPI rules outline the guidelines and regulations governing the use of UPI in IPO applications. Here are some essential rules to keep in mind:

  • SEBI guidelines: The Securities and Exchange Board of India (SEBI) mandates the use of UPI for retail investors applying for IPOs. This ensures a standardised and efficient process.
  • Bank participation: Not all banks are equipped to handle IPO applications via UPI. Therefore, investors must ensure that their bank is a participating institution before proceeding.
  • UPI app requirements: Investors must use UPI-enabled apps that support IPO applications, ensuring compatibility and smooth transaction flow.
  • Application limits: Retail investors can apply for IPOs up to a maximum of Rs. 2,00,000 using UPI, adhering to the prescribed limits.
  • ASBA compliance: The ASBA facility must be utilised for fund blocking. This ensures that the application amount remains reserved until the allotment process is complete.
  • Timely mandate acceptance: Investors must accept the UPI mandate request promptly to avoid application rejection, adhering to the specified timelines.
By following these rules, investors can ensure a seamless and compliant IPO application process using UPI.

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

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Frequently asked questions

Can I apply for IPO through UPI?
Yes, you can apply for an IPO through UPI. The Unified Payments Interface (UPI) allows investors to make payments for their IPO applications easily and quickly. To do this, you need to have a UPI ID and approve the UPI mandate request during the application process.

Which is better, ASBA or UPI?
Both ASBA (Application Supported by Blocked Amount) and UPI have their advantages. ASBA is a traditional method where the application amount is blocked in your bank account until the allotment is finalised. UPI, on the other hand, allows for a more seamless and faster application process, especially for online submissions. For individual investors applying for amounts up to Rs. 2 lakhs, UPI is often more convenient. ASBA is still widely used for larger amounts.

What is a third-party IPO application through UPI?
A third-party IPO application occurs when someone uses their UPI ID to apply for an IPO. This is done on behalf of another individual. However, this practice is not permitted. The UPI payment must be made from the applicant's own UPI ID to ensure proper identification and fund blocking.

Is third-party UPI banned for IPO?
Yes, third-party UPI applications for IPOs are banned. The Securities and Exchange Board of India (SEBI) mandates that the UPI ID used for the IPO application must belong to the investor applying for the shares. This ensures that the funds are correctly blocked in the applicant's account.

What is the limit for IPO application transactions using UPI?
The limit for IPO applications using UPI is Rs. 2 lakhs for retail individual investors. However, non-institutional investors can apply for amounts up to Rs. 5 lakhs using UPI. It is important to ensure that the UPI mandate is approved within the specified time frame to avoid application rejection.

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