Initial Public Offering or IPO is an ongoing talk between the share market traders and investors. The old players know all about it, but the new entrants are lost. Thus, we bring you the answer to one of the most asked questions – How to apply for IPO?
Before that, we need to learn about what an IPO is.
IPO stands for Initial Public Offering, and it is the way by which any private company goes public. Its shares are listed on the stock exchanges and then can be bought and sold by any trader or investor in the share market.
Returning to the fundamental question, i.e., how to apply for IPO, the first prerequisite is to have a demataccount. So, let us discuss the complete procedure in great detail.
How To Apply For IPO Online?
An interested trader or investor looks for ease while doing the process in the comfort of their homes in filling the application form for an IPO. Thus, they prefer to do the application process online.
Here, they are given two choices of payments to say per se. You can pay by using the ASBA method or the UPI method.
In this segment, we will discuss both of them in detail.
So, let’s go!
How To Apply For IPO Using ASBA?
Before we jump to listing the steps for the online process through ASBA, let us understand ASBA a bit.
It stands for Application Supported by Blocked Amount. It is the most commonly used method of applying for an IPO and is a mechanism that eases the application process for investors and traders alike.
For this mechanism to work efficiently, the regulatory body – SEBI, has approved more than 65 banks which include all the major banks of the country. Some of them are – State Bank of India, HDFC Bank, Citi Bank, Bank of Baroda, Axis Bank, Union Bank of India, etc.
This list can be checked on the official website of SEBI. Since the banks have to meet criteria to be approved, the traders and investors also have an eligibility criterion. They are listed below:
The application should be made via an approved bank on the ASBA List.
The IPO application should not be under any of the reserved categories offered by the issuing company.
The maximum investment amount is ₹2 Lakhs for the IPO shares or securities.
The investor or trader should have an active demat account to proceed with the application.
The investor or trader must retain the corresponding securities in a demat account. Moreover, the application should be for a dematerialized form of the same.
With the eligibility criteria met for both the parties involved, we need to understand what happens in this method.
In ASBA, the application form is submitted along with the bids placed. The amount corresponding to that is blocked in their bank account as their bank transacts on their behalf.
This amount is blocked in the account till the day the allotment process gets concluded.
If the shares get allotted to you, the amount is debited from your bank account, followed by the shares being credited in the corresponding demat account. Otherwise, the amount is unblocked, and you can utilize it.
The steps to follow for applying through the ASBA online process are as follows:
Log on to your net banking portal.
In the menu of the portal’s dashboard, you will find the Request button.
Click on it.
You will be redirected to the ‘IPO Application’ page on the bank’s portal.
Select the IPO you wish to apply from the list of all the open IPOs.
Place your bids for it. You can place up to 3 bids for one IPO.
Fill in the other mandatory details, like the depository details.
Confirm the application.
Submit the application for further processing.
After you have submitted the application, the amount will be blocked from your account. You can also do this process offline, which is discussed in the next section. But before that, we need to know how to apply for IPO through UPI.
The process for applying through UPI is listed in the steps below:
First, you must download and install a UPI mobile application from the Play Store.
Now, register your bank account and generate the UPI ID.
When you apply for the intended IPO, fill the UPI ID in the box for the payment section.
After the request is submitted, you will receive an amount blocking request on the UPI mobile application.
Click on the approve button to proceed.
Once it is processed, the corresponding amount will be blocked in your bank account till the allotment process concludes.
The amount will get debited or unblocked based on the allotment status of the IPO. This payment method for IPO was approved by the SEBI in 2019 as it has become popular among Indian citizens.
How To Apply For IPO Offline?
Many traders and investors are not comfortable with the online process and thus want to apply for IPO using the offline method. So, in this section, we will discuss it.
The offline ASBA process is simple and straightforward. All you need to do is visit the nearest branch of your bank and submit the IPO application in person. Some mandatory details you should have handy are:
Bank Account Number
Demat Account Number
PAN Card Number
After the complete application form is filled, submit it to the corresponding bank executive. He or she will process it through the designated bank portal.
We hope that you don’t panic about this method as it is just as easy as it sounds here.
How To Apply For IPO Without Demat Account?
If you have a demat account, you certainly are confused about – how to apply for IPO without a demat account.
Thus, we shall talk about the process before you apply for the desired IPO without any further ado.
The most crucial requirement to apply for IPO is to have an active demat account. Are you confused about how to open a demat account?
Now that you have a demat account, we should move to the part of applying for the IPO. The application for an IPO can be processed online or offline.
In the next section, we will discuss both of them properly.
Many traders and investors who are new to the process of applying for an IPO ask just one question – How to apply for IPO?
In this dedicated article, we have tried to answer all the necessary aspects of this query in detail. The first prerequisite to apply for IPO is to have a demat account with a depository participant of your choice.
You can apply for an IPO using the online method or the offline method. In the online method, you get two options. They are – ASBA and UPI, whereas in the offline method, you can apply for IPO only through ASBA.
The steps for both processes have been listed above.
We hope that all your queries have been resolved in this regard.
Happy investing and good luck!
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