How to Use UPI ID for IPO?

Table of Contents

Introduction of UPI ID in IPO Process

How to Generate a UPI ID?

How to use Stockbroker’s Application to apply for IPO via UPI ID?

Conclusion

Are you looking for information on how to use UPI ID for IPO? Currently, in the market, there is a prevalent trend of utilizing UPI (Unified Payments Interface) for IPO (Initial Public Offering) applications.

It is now possible for investors to apply for upcoming IPOs by simply using their UPI IDs. The Securities & Exchange Board of India (SEBI) has consistently implemented timely modifications, and one recent change pertains to the application process for IPOs, which can now be done through UPI.

Before you read about using UPI ID in IPO, you can go over our post on IPO in 2023 Performance Analysis: Which Companies Should You Invest On?

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Introduction of UPI ID in IPO Process

SEBI, through circular number SEBI/HO/CFD/DIL2/CIR/P/2018/138 posted on November 1, 2018, announced the introduction of the Unified Payments Interface (UPI) as a payment mechanism with Application Supported by Blocked Amount (ASBA) for retail individual investors’ applications in public issues. This development extended to various intermediaries, including Registered Stock Brokers, Depository Participants, Syndicate members and Registrar and Transfer agents.

The circular aimed to streamline the IPO application process for retail individual investors by incorporating UPI, a widely used and convenient payment interface. By integrating UPI with ASBA, investors were empowered to make seamless payments during the IPO application process, ensuring the necessary funds are blocked in their accounts until the allotment of shares is finalized.

This move by SEBI sought to leverage the benefits of UPI’s technological advancements, such as increased efficiency, reduced manual intervention, and improved transparency in the IPO application process. The circular marked a significant step towards modernizing the IPO ecosystem in India and enhancing the experience for retail investors participating in public issues.

How to Generate a UPI ID?

Creating a UPI ID on your mobile application is a simple process. To generate a UPI ID, follow the steps provided below:

1. Download a UPI 2.0 enabled mobile application on your smartphone. Paytm, Phone Pe, and Google Pay are a few popular UPI apps.
2. Fill in the required details during the registration process on the UPI mobile application.
3. Provide the necessary information, including your name, mobile number, and email address.
4. Verify your mobile number through the OTP (One-Time Password) sent to your registered mobile number.
5. Create a secure UPI PIN, which will serve as your UPI handle, which may resemble your bank’s name, such as “okhdfcbank” for HDFC Bank or “okicicibank” for ICICI Bank.
6. Now, with your generated UPI PIN, you can conveniently apply for IPOs on the broker’s website.

How to use Stockbroker’s Application to apply for IPO via UPI ID?

With the help of UPI ID, applying for IPO can be easy for you. Here are the different steps that you should follow:

1. Firstly, download your stockbroker’s mobile application on your smartphone and log in to your account.
2. Once logged in, from the available options, select the IPO you wish to apply for from the list of open issues. It is important to note that typically full-service stockbrokers offer a wide range of IPOs, including Mainline and SME (Small and Medium Enterprises), on their platform. Discount brokers may not provide the same level of IPO offerings.
3. Explore the provided list of IPOs and choose the one you are interested in participating in.
4. Carefully review the details of the selected IPO. Pay close attention to important information such as the start date, end date, issue size, lot size, allotment date, refund date, and any other relevant details provided for the offer.
5. Enter your UPI ID, which is linked to your bank account, in the designated field.
6. Make sure to enter the correct UPI ID associated with your bank account to ensure a smooth transaction.
7. When placing your bid for the IPO, keep in mind the lot size specified by the company. It is essential to place your bid(s) in multiples of the lot size. Ensure that your bid adheres to this requirement to avoid any discrepancies during the application process.
8. On the application page, you will find a checkbox option for the cut-off price. It is entirely your decision whether you wish to apply at the cut-off price or not. If you prefer to bid at a different price, you can enter the desired amount in the ‘Price’ field provided.
9. Before finalizing your application, carefully review all the entered details to ensure accuracy. Verify information such as the bid price, quantity, UPI ID, and any other relevant information required for the IPO application.
10. Once you have thoroughly checked all the details and are confident in their accuracy, click the “Submit” button to complete your application. Your IPO application request will be forwarded to the exchange on your behalf. At the exchange, your details will undergo verification, including your DEMAT account details with the Depository (CDSL or NSDL).
11. Within a few hours, you will receive a mandate request on your UPI mobile application. It is essential to note that this request must be accepted within 24 hours of its generation. Make sure to promptly respond to the mandate request and accept it within the specified timeframe.
12. By accepting the mandate request within 24 hours, you complete the necessary authorization for the IPO application process, ensuring a smooth transaction and facilitating the allotment process. Accepting the mandate will initiate the process of blocking the necessary funds in your bank account, which will remain reserved until the date of allotment, which typically occurs two days prior to the listing date.
13. If you are allotted shares in the IPO, the funds required for the application will be debited from your bank account, and the corresponding shares will be credited to your DEMAT account.
14. However, in the event that you are not allotted any shares, the blocked funds will be released on the date of allotment. This means that the reserved funds will be made available in your bank account once the allotment process is completed and no shares are allocated to you.

Take a break from reading about using UPI ID in IPO. Check out our post on Stocks, IPO or Mutual Funds: Which is the Better Investment Option for You?

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Conclusion

The introduction of UPI ID in IPO process aims to enhance efficiency by eliminating the requirement for manual intervention at multiple stages. Also, it is expected to significantly reduce the time duration from the closure of the IPO to its listing by as much as three working days.