How to Apply for an IPO Using UPI ID: A Step-by-Step Guide for Beginners

Investing in an Initial Public Offering (IPO) is an exciting way to become a part-owner of a company entering the stock market. With the rise of digital payments in India, applying for an IPO using a UPI ID has become simple, fast, and convenient. If you're new to the stock market or wondering how to use your UPI ID to apply for an IPO, this comprehensive guide will walk you through the process in simple American English. By the end, you’ll know exactly how to apply for an IPO, avoid common mistakes, and increase your chances of getting shares allotted. Let’s dive in!

What Is an IPO and Why Should You Care?

An Initial Public Offering (IPO) is when a company offers its shares to the public for the first time. It’s a chance for everyday investors like you to buy shares at a fixed price before they’re traded on the stock market. IPOs are popular in India because they often offer high returns if the company performs well. With the Unified Payments Interface (UPI), applying for an IPO has become easier than ever, even for beginners.

Why use a UPI ID? It’s quick, secure, and eliminates the need for physical paperwork or complex bank processes. Plus, most Indians already use UPI apps like Google Pay, PhonePe, or Paytm, making it a familiar tool. Curious about how it works? Keep reading to learn the step-by-step process!

Why Use UPI for IPO Applications?

Using a UPI ID to apply for an IPO has several benefits:

• Speed: Transactions are instant, saving you time.
• Convenience: No need to visit a bank or fill out lengthy forms.
• Cost-Effective: Most UPI transactions are free.
• Accessibility: Apply from anywhere using your smartphone.

But how exactly do you use UPI to apply for an IPO? Let’s break it down into simple steps.

Step-by-Step Guide to Applying for an IPO Using UPI ID

Step 1: Understand the IPO Basics

Before applying, you need to know a few key terms:

• Lot Size: The minimum number of shares you can apply for (e.g., 15 shares per lot).
• Price Band: The range of prices at which you can bid for shares (e.g., Rs. 100–Rs. 120 per share).
• Application Supported by Blocked Amount (ASBA): When you apply, the IPO amount is blocked in your bank account but not debited until shares are allotted.

Curious about where to find IPO details? Check the company’s prospectus or stock exchange websites like BSE or NSE.

Step 2: Ensure You Have the Right Tools

To apply for an IPO using UPI, you’ll need:

• A Demat Account: To store the shares you’re allotted.
• A Bank Account: Linked to your UPI ID for blocking funds.
• A UPI ID: Created through apps like Google Pay, PhonePe, or BHIM.
• A Trading Account: Optional but useful if you plan to trade shares later.
• A Broker or App: A stockbroker (like Zerodha, Upstox, or Groww) or a bank that supports IPO applications.

Don’t have a Demat account yet? Many brokers offer quick online account opening. Wondering which broker to choose? We’ll cover that later!

Step 3: Find an IPO to Apply For

IPOs are announced regularly. To find one:

• Visit the BSE (Bombay Stock Exchange) or NSE (National Stock Exchange) websites.
• Check financial news portals like Moneycontrol or Economic Times.
• Use your broker’s app, which often lists upcoming IPOs.

Each IPO has an application window (usually 3–5 days). Make sure you apply within this period. Want to know how to spot a good IPO? Look for companies with strong fundamentals and growth potential—more on this later!

Step 4: Check Your UPI ID

Your UPI ID must be linked to the bank account you’ll use for the IPO application. To verify:

• Open your UPI app (e.g., Google Pay, PhonePe).
• Ensure the linked bank account has enough funds to cover the IPO application amount.
• Confirm that your UPI ID is active and transactions are enabled.

Pro Tip: Some banks limit UPI transactions for IPOs, so check with your bank if UPI-based IPO applications are supported.

Step 5: Apply Through Your Broker or Bank

Here’s how to apply for an IPO using your broker’s app or website:

1. Log In: Open your broker’s app (e.g., Zerodha Kite, Upstox, or Groww).
2. Find the IPO Section: Look for “IPO” or “Primary Market” in the app.
3. Select the IPO: Choose the IPO you want to apply for from the list.
4. Enter Details:

   • Number of Lots: Decide how many lots you want to apply for (check the minimum lot size).
   • Price: Bid at the upper end of the price band for better chances of allotment.
   • UPI ID: Enter your UPI ID (e.g., yourname@upi).

5. Submit Application: Review your details and submit.

After submitting, you’ll receive a UPI mandate request on your UPI app. Curious about what this is? It’s a request to block the application amount in your bank account.

Step 6: Approve the UPI Mandate

• Open your UPI app (e.g., PhonePe, Google Pay).
• Look for a mandate request from your broker or the NPCI (National Payments Corporation of India).
• Approve the mandate within the deadline (usually 24–48 hours).
• The IPO application amount will be blocked in your account but not debited yet.

Why is the amount blocked? This ensures you have enough funds if shares are allotted. If you don’t get shares, the block is released.

Step 7: Wait for Allotment

Once the IPO application window closes, the company allocates shares based on demand. This process takes about 5–7 days. You can check the allotment status on:

• Your broker’s app or website.
• The registrar’s website (e.g., Link Intime or KFin Technologies).

If allotted, the shares appear in your Demat account, and the blocked amount is debited. If not allotted, the blocked amount is released. Wondering how to increase your chances of allotment? We’ll share tips later!

Step 8: What Happens Next?

• If Allotted: Shares are credited to your Demat account, and you can hold or sell them once they list on the stock exchange.
• If Not Allotted: The blocked amount is unblocked, and you can apply for another IPO.

Excited to see your shares listed? The listing day is when the stock starts trading, often at a price higher or lower than the IPO price.

Tips to Increase Your Chances of IPO Allotment

IPOs in India are often oversubscribed, meaning more people apply than shares available. Here’s how to improve your odds:

• Apply on Day 1: Submitting early shows genuine interest and may prioritize your application.
• Bid at the Cut-Off Price: Choose the highest price in the price band for retail investors.
• Apply for Minimum Lots: Applying for more lots doesn’t always increase chances, so stick to the minimum unless you’re a high-net-worth individual (HNI).
• Use Multiple Applications: If you have family members with separate Demat accounts, apply through each account (but never use the same bank account or UPI ID for multiple applications).
• Choose a Reliable Broker: Brokers like Zerodha, Upstox, or Groww have user-friendly platforms and good track records.

Curious about which brokers are best for IPOs? Let’s explore!

Best Platforms for Applying to IPOs Using UPI

Here are some popular platforms in India that support UPI-based IPO applications:

• Zerodha: Known for its simple interface and low fees.
• Upstox: Fast and reliable, with a strong IPO application system.
• Groww: Beginner-friendly with a seamless UPI process.
• ICICI Direct: Offers IPO applications through net banking and UPI.
• HDFC Securities: Trusted by many, with robust support for IPOs.

Each platform has its pros and cons. For example, Zerodha is great for low-cost trading, while Groww is ideal for beginners. Want to know which one suits you? Compare their fees and user reviews before choosing.

Common Mistakes to Avoid When Applying for an IPO

To ensure a smooth IPO application process, avoid these pitfalls:

• Wrong UPI ID: Double-check your UPI ID before submitting.
• Missing the Mandate Deadline: Approve the UPI mandate promptly, or your application will be rejected.
• Insufficient Funds: Ensure your bank account has enough money to cover the application amount.
• Incorrect Lot Size: Apply for the exact lot size mentioned in the IPO details.
• Applying Through Multiple Accounts with the Same UPI ID: This can lead to rejection.

Want to make your IPO journey foolproof? Follow these tips and double-check every step.

How to Choose a Good IPO to Invest In

Not all IPOs are worth your money. Here’s how to pick a promising one:

• Read the Prospectus: The Red Herring Prospectus (RHP) has details about the company’s financials, risks, and plans.
• Check the Company’s Background: Look for strong management, a clear business model, and growth potential.
• Evaluate Market Conditions: IPOs perform better in bullish markets.
• Look at Subscription Rates: High subscription can indicate demand but may reduce your chances of allotment.
• Check Grey Market Premium (GMP): This shows how much the IPO is trading for in the unofficial market before listing.

Curious about GMP? It’s a way to gauge investor excitement, but don’t rely on it alone!

Tax Implications of IPO Investments

Before investing, understand the tax rules:

• Short-Term Capital Gains (STCG): If you sell shares within a year, profits are taxed at 15%.
• Long-Term Capital Gains (LTCG): Profits from shares held over a year are taxed at 10% if exceeding Rs. 1 lakh.
• Dividends: Taxed as per your income tax slab.

Want to save on taxes? Consider holding shares for over a year to benefit from lower LTCG rates.

Frequently asked questions

1. Can I use any UPI app for IPO applications?

Yes, as long as your UPI ID is linked to a bank account supported by the broker or bank.

2. What happens if I don’t approve the UPI mandate?

Your application will be rejected, and you won’t be considered for allotment.

3. Can I apply for an IPO without a Demat account?

No, a Demat account is mandatory to hold the allotted shares.

4. How much does it cost to apply for an IPO?

The application itself is free, but you need funds to cover the lot size cost, which is blocked until allotment.

5. Can I cancel my IPO application?

Yes, most brokers allow cancellation before the application window closes. Check your broker’s policy.

Conclusion: 

Applying for an IPO using a UPI ID is a game-changer for Indian investors. It’s fast, secure, and accessible to everyone with a smartphone and a bank account. By following the steps in this guide, setting up your accounts, choosing the right IPO, and avoiding common mistakes, you’re ready to take your first step into the exciting world of stock market investing.