IPO Refund Process Under ASBA and UPI: When Blocked Funds Are Released

The IPO refund process under ASBA isn’t really a refund. When you apply for an IPO in India, your money never actually leaves your bank account. It just gets blocked, and after allotment the part that isn’t needed is released. If you know exactly when that release is due, who has to make it happen and what you’re owed when it runs late, you can skip days of worrying after a hot issue leaves you empty-handed.

Below we go through the current SEBI timeline under the T+3 listing rules, what happens to your blocked funds in full, partial and nil allotment, how UPI mandates are revoked, and the compensation SEBI requires banks and lead managers to pay for delays, with worked examples. If primary markets are new territory, our pillar guide on IPO investing in India covers the basics, and our explainer on the ASBA IPO application process covers how the bid itself is placed.

The “refund” is really an unblock

ASBA stands for Application Supported by Blocked Amount. SEBI’s Master Circular for the ICDR Regulations, last updated on February 9, 2026, describes the mechanism plainly: the bank (called a Self Certified Syndicate Bank, or SCSB) blocks the application money in the account named in your application, and the money stays blocked until the basis of allotment is finalised, the issue is withdrawn or fails, or your application is withdrawn or rejected.

Once the basis of allotment is finalised, the Registrar to the Issue tells the bank how much to transfer to the issuer’s account for the shares you actually got, and the rest is unblocked. So, practically speaking, every rupee you blocked ends up one of two ways:

• Debited and sent to the issue account, if shares were allotted against it.
• Unblocked and freed for you to use again, if no shares were allotted against it.

Since the money was never debited, don’t go hunting for a cheque, an NEFT credit or a separate “refund” entry. What you should see is the hold on your balance vanishing and, as we cover below, an SMS from your bank or UPI app.

Under ASBA your IPO money never leaves your account, so a “refund” is simply the bank lifting the hold on the amount that was not used for shares.

IPO refund process under ASBA: the T+3 timeline for releasing blocked funds

SEBI’s circular of August 9, 2023 cut the time between an issue closing and listing from six working days to three, where “T” is the issue closing date. It was voluntary for issues opening on or after September 1, 2023 and mandatory for issues opening on or after December 1, 2023. The same schedule now sits in Annexure XXIII of the 2026 master circular. Here are the steps that matter for your money:

The master circular defines working days as all trading days of the stock exchanges excluding Sundays and bank holidays. So a weekend or a bank holiday between the closing date and T+2 pushes the unblock date out. The issuer is required to print the timelines for allotment, unblocking and listing in its pre-issue, issue opening and issue closing advertisements, so the exact dates for any IPO are in its own ads and offer document.

Full, partial or nothing: what happens to the blocked amount

Full allotment

If you get every share you bid for, the whole blocked amount is transferred to the issue account on T+2 and nothing is unblocked. You’ll see a debit, not a release.

Partial allotment

You’ll run into this often in categories where allotment is proportionate. The amount for the shares you got is debited and the rest is unblocked, both on T+2 under the timeline above.

No allotment

Got nothing? Paragraph 13.10 of the master circular still puts a hard clock on the unblock. On T+2 the sponsor bank runs the online mandate revoke file for non-allottees and partial allottees, pushes leftover cases to the registrar, the registrar hands bank-wise pending cases to the SCSBs with the allotment file, and those SCSBs must finish unblocking non-allotted and partially allotted applications by the closing hours of the bank day on T+2.

Cancelled, withdrawn or deleted bids

Cancel or withdraw a bid while the issue is still open and you don’t have to wait for allotment. During the bidding period the registrar sends the list of cancelled, withdrawn and deleted applications to the banks every day within 60 minutes of the bid closure time, and the banks must unblock them by the closing hours of the same bank day.

Rejected or invalid applications

The registrar checks that the PAN on your demat account matches the PAN on your bank account. A mismatch, under the master circular, makes the application invalid once the basis of allotment is finalised. You still get the money back: SEBI’s General Information Document for public offers says the registrar passes rejected-bid details to the banks so those accounts are unblocked too.

If the whole issue is withdrawn or fails

If the whole issue is withdrawn or fails, the master circular is clear: the bank unblocks the amount once the merchant bankers send that information through the registrar.

Getting a UPI mandate revoked

If you bid with a UPI ID, the block sits on your account as a one-time mandate that you approved in your UPI app. The master circular allows individual investors bidding through an intermediary to use UPI up to the limit for which blocking through UPI is permitted, which it currently gives as ₹5 lakh. To release the money, that mandate has to be revoked. As noted above, the sponsor bank runs the online revoke file for non-allottees and partial allottees on T+2, and anything that does not go through online is passed to your bank to unblock offline by the end of that bank day.

To keep investors informed, paragraph 13.5 of the master circular requires banks and the UPI apps eligible for public issues to send SMS alerts for all ASBA applications. Under Annexure XVIII, the SMS after allotment must show the IPO name, the amount debited or unblocked (or both, for a partial allotment), and the date on which that happened, so that message is usually your first sign that the process is done. For UPI mandates, the in-app invoice can also show the number of shares allocated, the amount to be debited and the amount to be unblocked.

Late unblock? You may be owed money

Most investors we talk to have no idea about this part. SEBI doesn’t just set deadlines. It makes banks and lead managers pay investors when they miss them. Annexure XXI of the master circular sets out compensation payable by the SCSB:

• Delayed unblock for non-allotted or partially allotted applications: ₹100 per day or 15% per annum of the application amount, whichever is higher, from T+3 until the date of actual unblock.
• Delayed unblock of cancelled, withdrawn or deleted bids: the same rate, from the date the cancellation, withdrawal or deletion request is placed on the exchange bidding platform until the actual unblock.
• Multiple amounts blocked for the same UPI application: the extra blocks must be revoked instantly, plus ₹100 per day or 15% per annum of the extra blocked amount, whichever is higher.
• More money blocked than the application amount: the excess must be revoked instantly, plus ₹100 per day or 15% per annum of the excess, whichever is higher.

On top of this, Annexure XXII adds compensation payable by the post-issue lead manager if your grievance is not resolved promptly: again ₹100 per day or 15% per annum of the application amount, whichever is higher, from the day the lead manager or registrar receives your grievance until the actual unblock. The circular says SCSBs must pay compensation immediately on the date they receive your complaint, and the total you are owed is the bank’s compensation plus the lead manager’s.

For most retail-sized bids the flat ₹100 a day is the bigger of the two compensation rates; on a 365-day year, the 15% a year rate only takes over for applications above roughly ₹2.43 lakh.

A few examples, with the maths

These are hypothetical, with round numbers, just to show how the rules play out. None of them is a real issue.

Example 1: Partial allotment

Suppose an IPO has a lot size of 50 shares and an issue price of ₹300, and you bid for 3 lots in a category where allotment is proportionate.

• Amount blocked: 3 lots × 50 shares × ₹300 = ₹45,000.
• Shares allotted: 1 lot, or 50 shares.
• Amount debited on T+2: 50 × ₹300 = ₹15,000.
• Amount unblocked on T+2: ₹45,000 − ₹15,000 = ₹30,000.

Example 2: Counting the dates

Suppose an issue closes on a Tuesday and there are no bank or exchange holidays that week. T+1 is Wednesday, when the exchange approves the basis of allotment. T+2 is Thursday, by 4 pm of which the unblocking should be complete. T+3 is Friday, the listing day and the day from which compensation would start if the money is still blocked. If Thursday were a bank holiday, every step from T+2 onward would move by one working day.

Example 3: Compensation on a small application

Suppose your ₹15,000 application gets no allotment and the bank releases it six days into the compensation period that starts on T+3.

• 15% per annum of ₹15,000 is ₹2,250 a year. Assuming a 365-day year to turn it into a daily figure (our assumption; the circular states only the annual rate), that is about ₹6.16 a day.
• ₹100 a day is higher, so it applies: 6 days × ₹100 = ₹600 payable by the bank.

Example 4: When the 15% rate takes over

The 15% annual rate beats ₹100 a day only when 15% of the application amount divided by 365 is more than ₹100. That happens above ₹100 × 365 ÷ 0.15, or about ₹2,43,333. On a ₹5 lakh UPI bid, the largest the master circular currently allows through UPI, 15% a year is ₹75,000, or about ₹205 a day on the same 365-day basis, so the percentage rate would apply instead of the flat ₹100.

Money still blocked? Work through this

1. Confirm the allotment result first. Check the registrar’s or exchange’s allotment page, as explained in our guide to checking IPO allotment status online, so you know whether you should expect a debit, a release or both.
2. Check the dates. Work out T+2 from the issue’s own advertisement or offer document, remembering that Sundays and bank holidays do not count. If the bank day on T+2 hasn’t ended yet, the release may just not have happened yet.
3. Look at your bank account and UPI app. Check whether the hold has gone and whether the mandate in your UPI app shows as revoked, and look for the bank SMS.
4. Complain to the bank and the registrar. SEBI’s General Information Document tells applicants to contact the registrar for questions about unblocking, and the master circular makes the bank liable for compensation from the date it receives your complaint. Keep your application number, UPI ID, bank name and the amount blocked ready.
5. Escalate to SCORES if it is not resolved. SEBI’s investor grievance page says you should first approach the entity concerned and, if you are not satisfied, lodge a complaint on SCORES at scores.gov.in or through the SCORES mobile app. The same page says entities must file an action taken report with SEBI within 30 days of receiving a complaint, and lists SEBI’s toll-free helpline numbers, 1800 22 7575 and 1800 266 7575.

Things that hold up the release

• Not accepting the UPI mandate in time. SEBI’s timeline gives 5 pm on the closing day as the UPI mandate acceptance time, so leave it to the last minute and you risk missing that cut-off.
• A PAN mismatch between the bank and demat accounts. This makes the application invalid for allotment. Your money should still come back, but you lose your shot at shares.
• Counting calendar days instead of working days. A Sunday or a bank holiday after the closing date moves the release date, and a lot of “my money is stuck” panic turns out to be a holiday in the middle.
• Not knowing you are owed compensation. If the release is late, the rules above apply to all ASBA applications processed by banks, so ask for it when you complain.

Your questions, answered

How long does an IPO refund take under ASBA?

On the T+3 timeline, non-allotted and partially allotted applications should be unblocked on T+2 — two working days after the issue closes. The indicative schedule wants that done before 4 pm that day.

Do I get interest on the blocked amount?

No. During a normal block the money never leaves your account, so there is no separate interest payout. SEBI’s compensation kicks in only when the release is late, the bank blocks too much, or it blocks more than once.

Can I use the blocked money for something else during the IPO?

No. The amount stays blocked until allotment is finalised, the issue is withdrawn or fails, or your bid is withdrawn or rejected. If you cancel your bid during the bidding period, the bank must release it by the end of that bank day.

Who pays the compensation for a late unblock?

Your bank (the SCSB) pays for a delayed unblock and for wrong or extra blocks. If the complaint still sits unresolved, the post-issue lead manager pays an extra amount from the day it or the registrar receives your grievance until the money is actually released.

IPO refund process under ASBA, in a nutshell

Remember, the IPO refund process under ASBA is an unblock, not a payment back. Under SEBI’s T+3 rules, your unused money should be released on T+2, two working days after the issue closes, and cancelled bids are released the same bank day. If the release is late, SEBI’s master circular entitles you to ₹100 a day or 15% a year of the application amount, whichever is higher, from T+3, plus more from the lead manager if your complaint drags on. Check the dates against the issue’s own advertisement, confirm your allotment, and escalate to the bank, the registrar and then SCORES if your money is still stuck.

This article is for education only and is not investment advice. The worked examples use hypothetical numbers. Timelines and compensation are as stated in the SEBI documents linked above; always check the offer document of the specific issue and consult a SEBI-registered investment adviser before making investment decisions.