loader2
Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

What happens to your money once you bid for an IPO?

One of the stages in the IPO process is the bidding or subscription. When a company files for an initial public offering (IPO) and its application gets a nod from the Securities and Exchange Board of India (SEBI), there are several things it has to get in order as part of its public issue process.

Starting from hiring a merchant banker, filing a draft prospectus, conducting due diligence, valuation of the IPO, to the allotment of shares and listing. This is a broad outline of the steps involved in the process of a company going public.

Prior to share allotment, retails investors get a period within which they can apply to the IPO or bid for the company's shares. This can be done either online or offline.

Bidding for shares in an IPO

There is the option of applying online via your broker or going the offline way. When applying online, you now have the option of making the payment for the shares you bid for via the unified payment interface (UPI) option. All you are required to do is provide a UPI ID linked to your bank account. You can either use an existing UPI ID or create a new one.

What follows and what happens to your money in IPO bidding process

Once you have applied for the IPO, your broker uploads the bid details onto the stock exchange's platform, and the applicant's UPI ID is also shared with the escrow bank. Thereafter, the escrow bank requests the authority to block funds in your bank account (depending on the number of shares you have applied for). If you are allotted the same number of shares as applied for, the money is then debited from your account. Before the money is blocked, applicants are sent an intimation message on their registered mobile number linked to the said bank account.

In case the number of shares allotted are less than what you had applied for, the excess funds blocked in your account are released.

The same mechanism (also called ASBA- Applications Supported by Blocked Amount) is applied even if you pay for an IPO directly from your bank account without using your UPI ID. The alternative payment option is to use your Net Banking ASBA service if offered by your bank.

Allotment stage in IPO

It is at this stage that you get to know how much money has been debited from your bank account. If you are not allotted any shares in an issue, then the blocked amount in your account will be unblocked.

Once the IPO subscription period closes, all bids submitted by investors are assessed and checked. The incorrectly submitted applications are cancelled or disqualified. Of the remaining ones, the allotment takes place. The shares allotted to each investor depends on the extent to which the IPO has been subscribed.

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. Please note, I-Sec is acting as a distributor to offer IPO distribution related services and distribution of IPOs are not Exchange traded products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.