How to Buy IPO Online  Steps, Benefits and Eligibility Criteria

How to Buy IPO Online - Steps, Benefits and Eligibility Criteria

IPO investment is a smart way to enhance your chances of being a stakeholder in a company. Private companies often opt for listing themselves on stock exchanges via an Initial Public Offering. If you start investing in an IPO of a promising company, it can provide you with amazing returns and profit. You can now buy shares in IPO online. But you must be wondering how to buy IPO online in India.

Here’s a detailed guide.

Steps to Apply for IPO Online

There are two ways to apply for an IPO online. One through internet banking and the other through a broker. Here is a stepwise representation of both application processes:

Also Read: IPO Application Methods: Apply IPO Through ASBA

  • Net Banking

You can follow these easy steps to apply for an IPO online through Internet Banking seamlessly:

  1. Enter your login ID and password to open the Net Banking account
  2. Click on the Application Supported by Blocked Amount (ASBA) tab
  3. Navigate 'Apply IPO' tab and click on it
  4. Open the IPO list and select your preferred IP
  5. Enter your PAN number, name, bid quantity and price 
  6. Click on ‘Submit’

Your bid will be accepted the same day if you submit it before 2 pm on any business day. It will be accepted the next day if you submit it after 2 pm.

  • Through Broker

Here are the steps to follow to apply for an IPO online through a broker:

  1. Create an online account by registering your phone number and mail ID if you don't have any, and then log in to it 
  2. Navigate the IPO tab and select IPO name from the current IPO section
  3. Fill the box with the number of stocks or the lot size you prefer for bidding. 
  4. Select the bid price. If you wish to maximise your chances of receiving allotment, you can bid at the cut-off price. 
  5. Next, enter your UPI ID and click on the 'Submit' button. Once you have approved the transaction on your UPI ID, the stock exchange will approve your bid.
  6. You need to wait until receiving the mandate notification on the UPI app. Your application money will stay blocked till the IPO allotment date.

Benefits of Online IPO Application

So, now that you know how to buy IPO online, let’s take a look at the advantages of an online IPO application.

  1. Convenient: You can apply for an online IPO at any time from anywhere. So the process is convenient and seamless.
  2. Timesaving: It saves time as you no longer need to visit the bank or broker’s office and stand in long queues. 
  3. Transparent: You have the full authority to scrutinise the entire process. So, the online application process is transparent, and you need not pay any hidden charges.
  4. Assurance: If you have a savings bank account, you can earn interest from the application amount till the allotment date

Steps to Apply for IPO Offline

You can also opt for an offline IPO application if you aren’t quite comfortable with the online process. Here are the steps you can follow to apply IPO offline:

  1. Visit the nearest broking firm or bank branch
  2. Submit the IPO application there
  3. Fill up the Application Supported by Blocked Amount application form
  4. Provide the necessary KYC details
  5. Your invested amount will be debited after the share allotment

Factors to Consider Before Investing in IPO

So far, you have learned how to buy IPO in India online and offline. Now, take a look at the factors you should consider before starting your IPO investment:

  • You need to determine investment criteria for better financial decisions. It includes risk appetite, investment capital, long-term financial goals and more.
  • Before you select an IPO from the listings, opt for detailed research about the company prospectus. Know about its past performance, valuation and fundamentals.
  • Gather every available information about the listed IPO. It may include the company’s expansion idea, plan of action, long-term goals, every detail available in the prospectus, etc.

Eligibility Criteria for Investing in IPO

You need to fulfil some essential criteria to start buying shares in Initial Public Offering. Here are the eligibility criteria that you must meet:

  • SEBI-approved Investor: Securities & Exchange Board of India (SEBI) has set specific guidelines for an investor. As per the guidelines, four types of investors are eligible for investing in IPO, Non-Institutional Buyer (NII), Qualified Institutional Buyer (QIB), Retail Individual Investor, and Employees. You have to be an investor approved as per SEBI guidelines to start IPO investment. 
  • Demat Account: You need a Demat account with an approved Depository Participant to continue IPO investment. Moreover, this Demat account must be linked to your bank account. 
  • PAN Number: When applying for an IPO, you must produce your Permanent Account Number as identity proof. So, you should have a valid PAN card.
  • Sufficient Balance: To fund the application, you should have an adequate balance in your bank account that will be debited on the allotment date. Until the allotment date, the amount will remain locked into your account. The amount will be transferred to the company's account from your bank account after they allot you the share. However, the blocked amount will be released if you are not allotted shares.
  • UPI ID: You also need your existing UPI ID or create a new UPI for the transaction. This is all the more essential for online IPO applications.

Bottom Line

The online application process is hassle-free and saves you time from visiting the brokerage office. Besides, you can conduct the process from anywhere. However, some investors might prefer the offline IPO application procedure. It totally depends on the investor’s preference for which application mode they will choose.