How to Apply IPO Through UPI?

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Unified Payments Interface, abbreviated as UPI is an instant payment/bank transfer system. The gateway facilitates sending and receiving money in real-time. Besides, the platform can also be used for special purposes like IPO applications. Here is the information on how to apply IPO through UPI?

Before the introduction of IPO through UPI, one had to fill all the bank account details to apply for an IPO. This procedure consumed a lot of time hence, SEBI allowed investors to use their UPI ID for payments.

As per the rules laid by SEBI, UPI based IPO application is mandatory for all retail investors i.e, they must apply through the UPI route.

How To Apply IPO Through UPI Online?

IPO through BHIM UPI is not as complex as it may seem. Follow these steps:

Download the UPI app of your choice (only applicable for first-time users) and create your UPI id
If you have added two bank accounts, select the “primary bank account” for IPO application.
Now, fill your bid details in the IPO application form and mention your UPI id there. Finally, submit the application.
Once your application is received, your bid details are uploaded by the intermediary on the exchange’s bidding platform.
Your bid details along with your UPI ID is further shared by the exchange to the escrow / sponsored bank.
Now, the funds equivalent to the application amount is blocked by the bank authorities.
If you receive an IPO allotment, the respective funds will be debited from your bank account. You will receive an intimation message for the same wherein you will have to verify and accept the payment request.
In case of any excess money, the due amount is unblocked/credited back to the bank account. (Happens only after the bidding is done)

Having a Demat account with any of the stockbrokers offers you the option to apply for the IPO via UPI. So, if you are planning for Paytm IPO apply then open a Demat account now and fill in the application online.

To open a Demat account for FREE!

IPO Application Through UPI

The Unified Payments Interface as a medium for IPO applications is not just a quick process but also ensures minimal rejections due to signature mismatch or other technical glitches.

The travel time in the traditional offline method gave investors a hard time. With the online IPO application through UPI, the “amount blocking” request is sent directly to the UPI app.

Similarly, the authentication process is done when the user verifies and accepts the request through his phone, which proves that it is the same user who filed the application. This eliminates all the probable frauds that could otherwise happen in the traditional method.

So, for those who think, “Can I apply for IPO from two Demat account“, the answer is NO!

If you apply for the same IPO using the Demat accounts registered with the same PAN card, then one of your applications get rejected automatically.

Moreover, IPO using UPI reduces the time between an IPO closure and listing of shares.

IPO Application Process Through UPI

IPO via UPI involves two parties – the investor and the broker/bank. Here’s how it happens:

An investor creates his UPI id with a bank and after entering the bid details and UPI id, submits the form.
Now the respective stock broker uploads the investor’s bid details on the stock exchange.
The stock exchange then validates the investor’s PAN and Demat account details with NSDL / CDSL shares the bid details (including UPI id) with the respective IPO bank/sponsor.
Once the bank/sponsor receives the bid details, it sends an authorization request (for fund blocking) to the investor’s UPI id.
Finally, the investor, after receiving the request, confirm’s it on his/her UPI app.
If the IPO allotment is finalized, the funds are withdrawn from the investor’s bank account.

IPO Through UPI Status

IPO using Bhim UPI has clearly made payments simpler on the investor’s end. If you happen to apply for IPO, it is essential that you keep track of it.

You can check your IPO application status using your PAN number, Depositary Participant ID or the bid application number.

Also, as mentioned before, if you get an allotment, the blocked amount will be debited from your bank account and if not, the amount shall be unblocked/credited back to your bank account.

IPO Through UPI Mandate

The “mandate” is a feature in UPI where you can pre-authorize a debit from your bank account for a later date/time.

The UPI mandate, therefore, is used in scenarios where you need to transfer money later.

Hence, IPO through UPI id is well suited for such mandates because the amount is debited/deducted from your bank account only in case of an allotment.

Final Thoughts

The Unified Payments Interface (UPI) is an NPCI developed gateway. It is regulated by the RBI.

This payment gateway was made a payment option for IPO investments in late 2018 (by SEBI). As per the guidelines, only up-to ₹2 lacs is allowed for UPI-IPO payments.

The introduction of UPI for IPO applications is meant to quicken the entire process as the payment gateway allows instant fund transfers. Further, it reduces chaos, and chances of fraud on applications.

Hope this detailed article on making IPO applications through UPI helped. No more waiting, apply for IPO through UPI now. Happy trading!

If interested in investing funds in IPO, then open a Demat account now.

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