Proportionate Basis

Allotment on a proportionate basis means that when an IPO or rights issue is oversubscribed, available shares are distributed among applicants in proportion to the number of shares they applied for, rather than on a first-come-first-served or lottery basis. In India, SEBI mandates proportionate allotment for non-retail categories (QIBs and NIIs) in public issues. For the retail investor category, allotment is done by lottery if oversubscribed at the minimum application size. The proportionate basis method ensures equitable participation for institutional investors making large applications relative to the available issue size.