The initial public offering or IPO is a type of public offering in which a company's shares will be sold to the individual and institutional investors. Usually, a company which is going public will raise capital and funds by trading its initial public offering shares. During the process of IPO trading, a fraction of the share will be reserved for different types of investors like individual investors, high net worth individuals (HNIs), qualified institutional buyers.
Over the last few years, the success of the IPOs has prompted the potential IPO issuers to issue shares in the primary market for raising funds and listing as investors sentiment remains positive. The issue of IPOs have enabled many private equity funds and ventures to exit from companies which they funded through IPOs.
The United Payments Interface or UPI is a payment system for National Payments Corporation of India (NPCI) as this technique allows people to transfer money between two parties bank accounts instantly using the quick payment service (IMPS) infrastructure.
The Securities Exchange Board of India or SEBI has permitted the use of the united payment interface (UPI) identification number for application to public issues. An individual's UPI identification number or ID can be used as a payment option for making application to such IPO Issues. This particular process will significantly reduce the time consumed in the IPO application process.
Based on UPI ID, only one application will be allowed.
Creation of UPI ID
The united payment interface (UPI) identification number which is also referred to as the Virtual Payment Address or VPA is one of the unique ID which a subscriber will require to create by adding his/her bank account details in order to either accept or send money through UPI.
It is necessary to download the BHIM application or any other UPI enabled mobile application of the bank wherein the subscriber holds an account to create UPI ID.
While filling up the IPO application form, the UPI ID should be mentioned. Post filling in all the relevant details in the application form, the subscriber can submit the form to the broker or the financial advisor.
Mandate for Blocking
A broker will forward the application by updating the details of the applicant and the UPI ID in the system. A request for blocking of funds will be sent to the subscriber on the UPI mobile app.
Now, the subscriber will have to enter all the detail including the UPI PIN to approve the mandate for blocking. After this, funds to the extent of money applied for will get blocked in the subscriber's bank account.
Allotment or Non – Allotment
Post the allotment of the securities, if the subscriber receives entire allotment, then the entire blocked amount will be debited from the bank account. If in case partial allotment is made then only partial amount will be debited and the remaining funds will get unblocked.
If in case, there is no allotment, then all the blocked funds will be unblocked.