IPO Investing

Applying in an IPO


Demat Account

An investor has the option to apply for and receive the shares in physical form. However, it is advisable to get the allotment in demat form as the shares issued through an IPO/FPO are tradable only in the demat form. In any case, for all IPO/FPOs of any security of issue size of Rs. 10 crore or more, issues have to be compulsorily be only in dematerialized form, while QIBs and large investors (applying for more than Rs. 2,00,000), can apply only in demat form.

There are two depositories in the country-National Securities Depository Ltd. (NSDL) and Central Depository Services ( India) Ltd. (CDSL) .Both have An extensive network of authorized Depository Participants (DPs). An investor can open a demat account with any of these DPs.

The investor should fill in his the correct DP ID and Client ID details in the application forms. It is compulsory to have PAN for applying for an IPO/FPO. Any investor who wants to invest in an issue should have a PAN which is required to be mentioned in the application form. It is to be distinctly understood that the photocopy of the PAN is not required to be attached along with the application form at the time of making an application.


Bank Account/DD

Applications for IPO/FPOs are valid only if payment is made through a cheque or a demand draft. Application money cannot be paid in cash.

4    Process of Applying in an IPO/FPO

An investor needs to first obtain an IPO/FPO application form. Forms are normally available from share brokers, lead managers, syndicate members and collecting banks. Application forms can also be picked up from the vendors at major commercial streets in most towns (for example outside the Bombay Stock Exchange)

In the case of fixed price issues, the application form along with a cheque/demand draft for the requisite amount has to be deposited with the designated collecting bankers to the issue, whose names and addresses are printed on the application form.

Application forms should be filled carefully as incomplete/incorrect forms can be rejected due to incomplete details

In an endeavour to make the existing public issue process more efficient, SEBI introduced a supplementary process of applying in public issues, viz., the “Applications Supported by Blocked Amount (ASBA)” process. The ASBA process is available in all public issues made through the book building route, as well as for all rights issues. ASBA co-exists with the current process, wherein cheque is used as a mode of payment.

The main features of ASBA process are as follows:

a. Meaning of ASBA: ASBA is an application by an investor containing an authorization to self certified syndicate bank (SCSB) to block the application money in the bank account, for subscribing to an issue, if an investor is applying through ASBA. His application money shall be debited from the bank account only if his/her application is selected for allotment after the allotment is finalized.

b. Availability of ASBA bid-cum application forms: Investors can obtain ASBA bid-cum-application forms from Self Certified Syndicate Banks (SCSBs). These forms are also easily available to investors from the website of Stock Exchanges (BSE, NSE& MCX). Since November 01, 2011, SEBI has prescribed a single form for ASBA as well as non ASBA application.

c. Self Certified Syndicate Bank (SCSB): SCSB is a bank which offers the facility of applying through the ASBA process. A bank desirous of offering ASBA facility shall submit a certificate to SEBI, for inclusion of its name in SEBI’s list of SCSBs. The said list will be displayed by SEBI on its website at www.sebi.gov.in. ASBAs can be accepted only by SCSBs, whose names appear in the list of SCSBs displayed in SEBI’s website. On inclusion in the list of SCSBs, a bank shall commence its activities as an SCSB w.e.f. the 1st or 15th of a month, whichever is earlier, from the date of such inclusion. It shall then be deemed to have entered into an agreement with the issuer and shall be required to offer the ASBA facility to all its account holders for all issues to which ASBA process is applicable.

An SCSB shall identify its Designated Branches (DBs) at which an ASBA investor shall submit ASBA and shall also identify the Controlling Branch (CB) which shall act as a coordinating branch for the Registrar to the Issue, Stock Exchanges and Merchant Bankers. The SCSB, its DBs and CB shall continue to act as such, for all issues to which ASBA process is applicable. The SCSB may identify new DBs for the purpose of ASBA process and intimate details of the same to SEBI, after which SEBI will add the DB to the list of SCSBs maintained by it. The SCSB shall communicate the following details to Stock Exchanges for making it available on their respective websites; these details shall also be made available by the SCSB on its website:


Name and address of the SCSB


Addresses of DBs and CB and other details such as telephone number, fax number and email ids.


Name and contact details of a nodal officer at a senior level from the CB.

d. BSE/NSE websites: Investors can download and print ASBA application forms from the websites of the Stock Exchanges i.e. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) which provideact as an electronic interface for ASBA facility i.e. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Each ASBA form, so downloaded, shall have a unique application number and can be used for making ASBA applications in public issues. The ASBA form for a specific public issue is made available on the websites of the Stock Exchanges at least one day before opening of a particular public issue. Investors will also have online access to soft copy of the abridged prospectus/prospectus of the public issue. For revisions of bids, investors can take print of a bid revision form.

The unique application number on the form is important from a control and processing perspective point of view. Therefore, applications made using photocopy of the downloaded form shall not be accepted.

A hyperlink to the websites of BSE or NSE websites for this facility is also provided on the websites of Merchant Bankers and SCSBs.

e. ASBA Process in brief: An ASBA investor shall submit an ASBA physically or electronically through the internet banking facility, to the SCSB with whom the bank account to be blocked is maintained. Syndicate/Sub-Syndicate members may also procure ASBA forms from the investors and submit it to SCSBs (Syndicate / Sub- Syndicate members would be required to upload the bid and other relevant details of such ASBA forms in the bidding platform provided by the stock exchanges and forward the same to the respective SCSBs. SCSBs shall carry out further action for such ASBA forms such as signature verification, blocking of funds etc. and forward these forms to the registrar to the issue).

The application money shall remain blocked in the bank account till finalisation of the basis of allotment in the issue or till withdrawal/ failure of the issue or till withdrawal/ rejection of the application, as the case may be. The application data shall thereafter be uploaded by the SCSB in the electronic bidding system through a web enabled interface provided by the Stock Exchanges. Once the basis of allotment is finalized, the Registrar to the Issue shall send an appropriate request to the SCSB for unblocking the relevant bank accounts and for transferring the requisite amount to the issuer’s account. In case of withdrawal/ failure of the issue, the amount shall be unblocked by the SCSB on receipt of information from the pre-issue merchant bankers.

ASBA facility in rights issue shall enable a shareholder of the company as on record date to apply through ASBA mode by selecting the option of ASBA either (i) in Part A of the application form of rights issue, or (ii) in the plain paper application as to whether they desire to avail of the ASBA option, to the Self Certified Syndicate Bank (SCSB) with whom the bank account to be blocked, is maintained.

f. Obligations of the Issuer: The issuer shall ensure that adequate arrangements are made by the Registrar to the Issue to obtain information about all ASBAs and to treat these applications similar to non-ASBA applications while finalizing the basis of allotment, as per the procedure specified in the Guidelines.

g. Applicability of ASBA process: ASBA process shall be applicable to all public issues and rights issues which provide for not more than one payment option. The ASBA facility has been made mandatory for non-retail investors (Qualified Institutional Buyers and Non-Institutional Investors) making applications in public/rights issues. But a retail investor has the option of making application through ASBA or through cheque.

Who can apply through ASBA facility: In public issues all the investors can apply through ASBA. In rights issues, all shareholders of the company as on record date are permitted to use ASBA for making applications provided he/she/it

a.   is holding shares in dematerialized form and has applied for entitlements or additional shares in the issue in dematerialised form;

b. has not renounced its entitlements in full or in part;

c. is not a renouncee;

d. who is applying through blocking of funds in a bank account with the Self   Certified Syndicate Bank.

Applying for IPO/FPOs on the Internet

Websites of various brokerage firms are now allowed the facility to providetheir clients to apply for IPO/FPOs online.

Withdrawal of an Application after Closure of an IPO/FPO

The Indian laws allow for a withdrawal of an application before the date of allotment.

Proof a Bidder can Request from a Trading Member for Entering Bids
The syndicate member returns the counterfoil with the signature, date and stamp of the syndicate member. The investor can retain this as a sufficient proof that the bids have been taken into account.

Changing/Revising the Bids

The investor can change or revise the quantity or price in the bid using the form for changing/revising the bid that is available along with the application form. However, the entire process of changing of revising the bids should be completed within the date of closure of the issue.

Knowing about IPO/FPOs currently open or are about to hit the market
Every week SEBI issues press releases for information of the public, details of offer documents filed with SEBI and observations issued.

At what Price should a Retail Investor apply?

A retail investor is not required to make his bid at a specific price. Since he is not able to take a call on the right price, he should use the cut-off option. This would ensure that his application will be considered valid at all prices, including the final price decided by the issuer. For making bids at cut-off price, the payment has to be made at the highest price of the price band. In case a lower price is finalized or in case the investor is an unsuccessful allottee or is allotted lesser shares than applied for, he would get the necessary refund.

How to improve the chances of allotment in an IPO/FPO?

As most IPO/FPOs get oversubscribed, a retail investor is often disappointed in not getting any allotments or getting miniscule allotments. If an investor has decided on investing in a specific IPO/FPO based upon merits, he should commit as much resources as he can to that IPO/FPO. He should apply for as many shares as possible, within the limit of Rs. 2,00,000. It would also be worthwhile to apply in the names of all family members, provided all of them are applying from their own accounts and all of them have a valid demat account.


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Information provided herein is purely for dissemination of information and creating awareness among the investors about various aspects of investing. Although due care and diligence has been taken, the Institute of Company Secretaries of India (ICSI) shall not be responsible for any loss or damage resulting from any action taken by a person on the basis of the contents hosted on the website. It may also be noted that laws/regulations governing the markets are continuously evolving, hence an investor should familiarize himself with the latest laws/ regulations by visiting the relevant websites or contacting the relevant regulatory body.