IPO Application Categories

Investors must choose one of the following categories when applying for IPO shares. Each category has its own reserved quota and allocation procedure. Here's an overview of the various categories of IPO applications:

1. Retail Individual Investors (RIIs)

Retail Individual Investors are investors who make an application for shares in an IPO for a value of Rs. 2 lakh or less. This category is reserved specifically for small investors. Most of the IPO shares are generally set aside for this category.

• Quota: Generally about 35% of the total IPO shares are set aside for retail investors.
• Allocation: The allocation is usually done according to the demand in this category. If demand exceeds supply, a lottery system is employed for allocation of shares.

2. Non-Institutional Investors (NIIs)

Non-Institutional Investors are corporates and high-net-worth individuals (HNIs) who make applications for more than Rs. 2 lakh worth of shares. They are usually allotted ahead of retail investors but with higher application sizes.

• Quota: Typically 15% of the overall IPO shares are kept aside for NIIs.
• Allocation: In the event of oversubscription, NIIs can also receive an allocation on a proportionate basis.

3. Qualified Institutional Buyers (QIBs)

Qualified Institutional Buyers are institutional investors like banks, mutual funds, insurance companies, and other large organizations that are permitted to invest huge sums in an IPO.

• Quota: Approximately 50% of the IPO shares are normally kept for QIBs.
• Allocation: This category is normally allotted shares proportionally based on the demand.

4. Employee Category

Employees of the issuing company of the IPO might be permitted to apply for shares in the Employee category. This category is designed to motivate employees to become company stakeholders.

• Quota: This might differ but typically a lesser proportion of the entire IPO shares, sometimes between 1-5%.
• Allocation: A discount on the IPO price is usually given to the employees as an incentive for subscribing.

5. Shareholder Category

Shareholders in the company (usually of specific tenure) may apply for shares under the IPO in the Shareholder category. The Shareholder category is generally made available for existing shareholders in the company prior to the IPO.

• Quota: The Shareholder category varies, and shares in a particular percentage may go to existing shareholders.
• Allocation: The process of allocation in this category can be dependent on the number of shares owned by the current shareholders.

Each category has a separate allocation process, and the proportion of shares to be reserved for each category can differ according to the particular IPO.

According to regulations, there must be one application per PAN. Therefore, an investor cannot bid in more than one category. Either an individual investor can bid as an RII, or sNII or bNII. If the investor files in more than one category as shown below, the application would be rejected:

• RII + sNII - Not permitted
• RII + bNII - Prohibited
• sNII + bNII - Prohibited

But, if an IPO has additional reserved categories such as Employee and Shareholder, then an investor can apply in multiple categories and such applications will not be counted as multiple bids. Let us have a look at all such scenarios and combinations in which an investor can apply and the respective limits.

Note: In certain cases, employees are given discount if bidding amount is up to Rs 2 lakhs. Check the details in offer document before applying.

IPO Application Time Period

• IPO Opening Time: 10:00 AM (Issue Opening Date)
• IPO Closing Time: 5:00 PM (Issue Closing Date)
• Subscription Period: IPOs usually remain open for at least 3 days and at most 10 days.

Whereas stock exchanges take subscription applications from 10:00 AM to 5:00 PM during the days of the IPO window, the specific cut-off hour for submitting the applications can be different for each bank and broker. The majority of banks and brokers permit the submission of IPO applications 24/7 for the IPO window. Nevertheless, the applications won't be transmitted to the exchange until the next day at 10:00 AM.

For the final day of IPO subscription, there may be a cut-off time to allow for timely processing. Below is the list of cut-off times of some of the leading banks:

• SBI Bank: 2:00 PM
• ICICI Bank: 3:00 PM
• HDFC Bank Net Banking: 3:00 PM
• Axis Bank: 3:00 PM
• Kotak Bank: 2:00 PM

It is always best to confirm the actual cut-off time with the respective bank or broker, particularly on the final day of the IPO.

IPO Application Charges

• No fee: Stock brokers and banks do not pay any fee for applying for an IPO. They earn a processing fee from the issuing company for accepting the applications.
• Brokerage fee: If you plan to sell the shares of an IPO that has been allotted to you in the future, stockbrokers will charge a brokerage fee. Some of the brokers like Zerodha provide free IPO investment without any brokerage fee for stock delivery-based trading.

• The IPO application form is a two-page document needed only for offline applications.
• First Page: Includes details of the applicant, the offer, and the counterparty.
• Second Page: Includes instructions.
• Application Number: Each has a specific application number for tracking. The pre-printed Bid cum Application form No. is used as the application number in offline forms.
• For online submissions, the bank or broker uploads the data to the exchange using an API, and an application number is created.

You may also download the IPO application form as a PDF from the NSE or BSE website for offline submission.

IPO Application Number

• IPO application number is a unique number assigned to refer to the application and allotment status of investors.
• For online applications, the IPO application number is automatically generated after successful submission of the application to the exchange.
• For paper applications, the application number is pre-printed as part of the Bid cum Application form.

• Single application per PAN: An investor can apply for one IPO per PAN number. Any multiple applications under a single PAN will be rejected.
• Payment Source: Payment should be from the investor's own bank account so that it does not get rejected. Some third-party IPO applications are accepted in rare cases, but the practice is that payment should be from the investor's own account.
• UPI Facility: Only for retail investors. UPI can be chosen as a payment option by retail investors.
• ASBA Facility: For all categories of investors, i.e., retail investors, non-institutional investors, and qualified institutional buyers (excluding anchor investors).
• Cut-off Price: Retail investors alone are eligible to apply for IPOs at the cut-off price.

By following these rules, investors can effectively go through the IPO application process and have a better chance of allotment.

As soon as an IPO bid has been made, the status of an investor's application can be checked through different means. The status will show if the application is in process, if it has been fulfilled, or in case there's a payment or UPI mandate issue. Below is a summary of the steps and means by which the IPO application status can be checked:

1. Status Indicators

• IPO Application Under Process: This means that the application has been successfully made, but it is being processed by the bank or broker before being sent to the exchange.
• IPO Application Executed: This implies that the application has been successfully processed, and the bid has been sent to the exchange.
• UPI Mandate Request Pending/Approved: If you submitted your application using UPI, this status tells you if the UPI mandate has been approved or is pending.
• Payment Received by Sponsored Bank: This status indicates that the payment for your application has been received by the bank that manages the IPO subscription.
• Bid Submitted: This status informs you that your bid has been successfully submitted to the stock exchange.

2. Checking Status on the Exchange Websites

NSE IPO Application Status

• How to Check:
  1. Go to the NSE website.
  2. Utilize the IPO application verification tool.
  3. Register with your PAN number
  4. Upon registering, you are able to see the IPO application details and its status.
  5. Application status is available up to 6 days from when the issue closes.

This tool enables investors to confirm the IPO application details uploaded to the exchange and also view the allotment status upon its availability.

BSE IPO Application Status

• How to Check:
  1. Go to the BSE website.
  2. Go to the IPO application status page.
  3. Provide details such as issue name, application number, or PAN number.
  4. Fill in the CAPTCHA to ensure you're not a robot.
  5. Submit to check your application status.

3. Offline Application Status

In case the IPO application was submitted offline via a physical form:

• Check with the Broker/Bank: You will have to inform the concerned broker or bank by which you had made the offline application. They will give the status and updates about the application.

4. Amendments or Corrections

• In case you are required to modify your offer or correct any information in your IPO application, you need to inform the bank or broker prior to the issue closure. After the issue is closed, it is not possible to make any changes.

By logging into the application status regularly, you can keep yourself informed of your IPO bid's progress and monitor the allotment results as and when available.