ASBA IPO Application Process: How UPI and ASBA Bids Work for Retail Investors in India

The ASBA IPO application process is how every investor in an Indian public issue pays for shares today. When you apply, your money doesn’t go to the company. It just gets blocked in your own bank account until allotment is decided. If you’re an individual applying through a broker, that block now mostly happens through a UPI mandate on your phone. In this guide we’ll go through how ASBA and UPI bids actually travel, who handles them along the way, the clock that runs from bid to listing under SEBI’s T+3 timetable, and the slip-ups that get applications rejected.

New to public issues? Start with our pillar guide to IPO investing in India. For the app-by-app steps on one popular broker, see how to apply for an IPO in Groww.

What ASBA means when you apply for an IPO

ASBA is short for Application Supported by Blocked Amount. You don’t write a cheque or send money to the issuer. You authorise your bank to hold back the application amount in your account. As SEBI puts it, investors are “just writing their bank account numbers and authorising the banks to make payment in case of allotment”.

That line is from SEBI circular CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015, which made ASBA the only allowed payment method for all investors in public issues opening on or after January 1, 2016. NSE’s ASBA procedure page states the same rule and explains the key feature: the application money stays in the investor’s account until the basis of allotment is finalised.

Before it made ASBA compulsory, SEBI’s board noted at its June 23, 2015 meeting that more than 99.5% of applications were already coming from centres where ASBA was available, and that in a few issues it studied, ASBA applications made up 99.90% of the total bid amount from all investors. The board also spelt out what investors gain. You give the payment mandate in the form itself “without suffering loss of interest for the intervening period”, and there’s no refund to chase, because nothing left your account to begin with.

Under ASBA your money never leaves your account when you bid. The only real question during an IPO is whether the block is in place before the cut-off, and that is the step most retail applicants get wrong.

Where UPI fits into the ASBA IPO application process

UPI doesn’t replace ASBA. It’s simply a way to create the ASBA block from a phone app rather than a bank branch or a net-banking screen. SEBI brought in UPI as an additional payment mechanism with ASBA for retail individual investors through a circular dated November 1, 2018, and made it mandatory from July 1, 2019 for retail applications submitted through intermediaries. Paragraph 1 of SEBI’s April 5, 2022 circular on UPI limits (SEBI/HO/CFD/DIL2/CIR/P/2022/45) sets out that history.

That same circular lifted the ceiling. It notes that the National Payments Corporation of India (NPCI) raised the per-transaction UPI limit for IPO ASBA from ₹2 lakh to ₹5 lakh. It also requires all individual investors applying for up to ₹5 lakh to use UPI and give their UPI ID in the bid form when they go through a syndicate member, a registered stock broker, a depository participant (DP) or a registrar and share transfer agent (RTA). The change covers public issues opening on or after May 1, 2022.

People mix up two limits all the time. SEBI’s FAQ on using UPI in public issues keeps them apart:

• UPI limit: an individual can block up to ₹5 lakh per application through UPI.
• Retail category limit: the retail individual investor (RII) category still caps out at ₹2 lakh.
• The gap between them: an application above ₹2 lakh and up to ₹5 lakh counts as a non-institutional investor (NII) bid, even though you pay through UPI.

So bidding ₹3 lakh through UPI doesn’t give you a bigger retail application. It puts you in the NII book, where allotment works differently. Our guide on applying in the HNI category explains how that book is divided.

The four routes to submit an ASBA bid

The 2015 circular lists where an investor can hand in a bid-cum-application form: a Self Certified Syndicate Bank (SCSB) where the account to be blocked is held, a syndicate or sub-syndicate member, a registered stock broker, a DP, or an RTA. The last three have to be listed on the stock exchange website as eligible for this work. In real life, retail investors use four routes.

1. Online through your broker (UPI)

This is the one most of us use. You pick the IPO in your trading app, enter quantity and price, and type in your UPI ID. The broker uploads the bid to the exchange platform. SEBI’s investor education page on applying through ASBA explains what follows. The exchange sends the bid and UPI ID electronically to the sponsor bank the issuer has appointed, the sponsor bank sends you a request to authorise the block, and once you approve it, the money is blocked in your account.

2. Net banking or mobile banking with your bank (bank ASBA)

Plenty of SCSBs have an IPO section inside net banking. In this case the bank uploads the bid itself and blocks the funds directly, with no UPI mandate involved. The 2015 circular says that when the form goes to an SCSB, the bank captures the bid in the exchange system and “may begin blocking funds available in the bank account specified in the form”.

3. 3-in-1 accounts

Some brokers that also run a bank and a depository offer linked trading, demat and bank accounts. SEBI’s T+3 circular treats “Online ASBA through 3-in-1 accounts” as a separate channel with its own cut-off, which we cover in the timeline below.

4. Physical forms

Paper forms haven’t disappeared. You can still submit one at an SCSB branch or with a syndicate member. They come with the earliest deadlines on closing day, though, so skip them unless there’s no digital option. SEBI’s FAQ names the physical form at an SCSB, or a linked online trading, demat and bank account, as the fallback if your bank doesn’t offer the UPI mandate facility.

Step by step: what happens after you click apply

Taking the UPI route as the example, this is the sequence as SEBI’s investor page and FAQ describe it:

1. Bid placed. You enter your bid along with your UPI ID. The intermediary uploads it to the exchange bidding platform.
2. Validation. By the end of each bidding day, the exchange checks the bid against depository records for DP ID, client ID and PAN, as the 2015 circular requires.
3. Mandate request. The sponsor bank sends a collect request to your UPI app. SEBI’s FAQ tells you to look for a “Verified Merchant” tag and check the bid-cum-application number, amount and other bid details on the request.
4. Block. You enter your UPI PIN once to accept. The amount is blocked, not debited.
5. Allotment. Once the issue closes, the registrar finalises the basis of allotment with the exchange.
6. Debit or unblock. For the shares you’re allotted, the blocked amount is debited and transferred. According to the FAQ, whatever isn’t used, whether because of no allotment, partial allotment or a cancelled bid, gets unblocked.

When allotment is out, our walkthrough on how to check IPO allotment on NSE and BSE shows you where to look.

The T+3 clock: cut-offs on the closing day and after

SEBI’s circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated August 9, 2023 shrank the gap between issue close and listing from six working days (T+6) to three (T+3), with T being the issue closing date. It was voluntary for issues opening on or after September 1, 2023 and became mandatory for issues opening on or after December 1, 2023. Its annexure is the timetable every ASBA bid now follows.

What this means in practice is that closing day has two separate deadlines. Your bid must be on the exchange platform, and your UPI mandate must be accepted, by 5 pm. A bid that’s uploaded but never authorised in your UPI app isn’t a valid paid application. And if you’re bidding as an NII through UPI, note that the NII book shuts at 4 pm, an hour before retail.

Under T+3, an investor who does not get shares should see the UPI block released before 4 pm on the second working day after the issue closes, a day before the stock even starts trading.

The circular tightened identity checks too. Before blocking funds on direct bank ASBA and syndicate ASBA applications, SCSBs have to confirm that the PAN in the application matches the PAN linked to the bank account. The registrar then runs a third-party check matching the PAN in the demat account against the PAN in the bank account. If they don’t match, the application is treated as invalid for allotment. And if unblocking is delayed, any compensation owed to investors is now counted from T+3.

A worked example (hypothetical numbers)

Say an IPO has an upper price band of ₹150 and a lot size of 100 shares. One lot at the upper band costs ₹15,000. A retail investor bids for 10 lots at the cut-off price, so ₹1,50,000 is blocked through UPI. That’s within both the ₹2 lakh retail limit and the ₹5 lakh UPI limit.

If the investor gets one lot, ₹15,000 is debited and ₹1,35,000 is unblocked. If they get nothing, the full ₹1,50,000 is released. Since the money never left the account, it may keep earning whatever interest the account pays during the issue, which is exactly the benefit SEBI’s board highlighted in 2015. These figures are only for illustration and don’t refer to any live issue.

Had the same investor bid ₹3,00,000, the application would still go through UPI, but it would be counted in the NII category rather than retail, under the SEBI FAQ rule above.

Common reasons ASBA and UPI bids fail

• Third-party UPI ID or bank account. SEBI’s FAQ says applications by retail investors using someone else’s UPI ID, or by any investor using a third-party bank account, aren’t valid for allocation. Use a UPI ID linked to an account in your own name.
• Bank not on the SCSB list. According to SEBI’s investor page, your UPI ID must be created with a bank on its list of SCSBs eligible to act as an issuer bank, and you have to use an app and UPI handle from its list of mobile applications for UPI in public issues.
• Mandate declined or wrong PIN. The FAQ says a declined request or a wrong UPI PIN cancels that transaction. You’ll need to go back to the same intermediary and start it again before the issue closes.
• Insufficient balance. If the account doesn’t have enough money, SEBI’s FAQ says the block request is declined, and the application is then treated as invalid and not eligible for allocation. Keep the full bid amount in the account until the mandate goes through.
• PAN mismatch. Under the T+3 circular, if the PAN in your demat account doesn’t match the PAN linked to your bank account, the application is invalid.
• Leaving it to the last hour. A declined or failed mandate has to be restarted through your intermediary before the issue closes, so bidding a day or more early gives you time to sort out problems before the 5 pm closing-day cut-off.

Changing or cancelling an ASBA bid

SEBI’s FAQ says retail individual investors can withdraw bids until the issue closes, through the same intermediary they applied with, and broker apps usually have a modify or cancel button. Modifying a UPI bid sends a fresh mandate request that you have to authorise again; if you ignore it, the earlier approved mandate stays. Cancelling a bid revokes the mandate, and the blocked funds are released online. The FAQ also warns against approving a mandate request after you’ve cancelled the bid on the exchange platform, since that only holds up the release of your money.

If money is still blocked after allotment and there are no shares in your demat account, the FAQ suggests raising a complaint through your UPI app or going to your bank, the registrar or the intermediary you applied through, quoting the Unique Mandate Number (UMN) from the block request.

What this means for you as a retail investor

The ASBA IPO application process is built so that the investor carries almost no payment risk. Nothing is debited until shares are allotted, and unblocking has taken the place of refunds. What the system can’t do is accept a bid you never authorised. So check that your bank and UPI app are on SEBI’s lists, make sure your bank and demat accounts carry the same PAN, accept the mandate as soon as it pops up, and keep the 5 pm closing-day cut-off in mind. Get those right, and the only thing left to luck is the allotment itself.