Introduction to IPOs and the Application Process
Investing in Initial Public Offerings (IPOs) has become much more accessible and convenient in the digital age. Gone are the days of manually filling out forms and visiting physical branches to submit IPO applications. Today, most of the processes can be completed online, making it simpler and more convenient for investors. There are three main methods to apply for an IPO: an offline method and two online methods. This guide will walk you through these methods step-by-step.
Offline Method for Applying for an IPO
The traditional way to apply for an IPO involves filling out the IPO form manually and submitting it to your broker or branch office. For retail investors, this process can be authenticating via the Unified Payment Interface (UPI) and approving a Request in User Payment Application (UPA).
Filling the IPO Form: Ensure all details are filled in accurately, including the number of shares, bank details, and DP (Dealing Participant) details. Any mistakes can lead to your application being rejected. Authentication andApproval: Retail investors can authenticate the application with UPI amounts and approve the Request in UPA for the IPO application to be considered. Multiple Applications: Avoid duplicating your application as it may be rejected due to multiple submissions.Online Methods for Applying for an IPO
There are two predominant online methods for applying for an IPO, making the process even more streamlined.
Using Your Online Trading Account and Demat Account
The first online method involves using your online trading account and demat account with your broker. If you already have these accounts, applying for an IPO is straightforward as your bank and demat details are pre-stored in the system, reducing the chance of errors.
ASBA (Application Supported by Bank Guarantee) Facility: Use this facility to freeze only the designated amount and the funds will be debited only on the day of allotment. This process happens on T 2 day after the IPO closure, ensuring a quick fund churn. UPI Authentication: You can authenticate your application via the UPI method, making the process seamless.Internet Banking Method
The second online method involves using the internet banking method. For this, your internet banking should be with a self-certified syndicate bank. Here, the bank places a direct hold on the money through internet banking authentication, without the need for UPI authentication.
No UPI Authentication: The bank directly holds the money through internet banking authentication, simplifying the process. Same Processes as ASBA: The ASBA lien is lifted the moment the allocation is made, just as in the first online method.Final Tips for Retail Investors
As a retail investor, it is highly beneficial to bid at the cut-off price. This increases the likelihood of your IPO application being accepted, providing a higher chance of securing the shares you are interested in.
Remember to always double-check and ensure accuracy in all your applications to avoid rejections. By familiarizing yourself with the different methods and tips mentioned above, you can navigate the IPO application process more confidently and efficiently.