How can an NRI apply for an IPO?: Zerodha, the leading discount stock brokerage company in India has set off stage for the Non-Resident Indians.
Through them, NRIs can perform their stock trading operations in National Stock Exchange, NSE, and Bombay Stock Exchange, BSE.
Any NRI can enter into Indian Stock Markets by abiding by the rules and regulations laid out by the SEBI and further the policies approved by the Reserve Bank of India, RBI.
This article focuses on how an NRI can apply for an IPO, and stay connected for information on future public offers (FPOs).
Further, when applying for an IPO, if your NRE/NRO bank account fails to comply with the UPI then the alternate procedure adopted is through Application Supported by Blocked Amount (ASBA).
Moreover, you can also understand the methodology of preparing the 3 bids for which an NRI is eligible.
How Can an NRI Apply for an IPO?
- The procedure for the NRI to participate in the IPO issues is the same as for any Indian resident wanting to buy shares in the IPO issue.
- An NRIs will have to link the NRE/NRO bank account of an NRI must be in compliance with the UPI. Then, you can proceed to apply through Kite, an exclusive software developed and designed by Zerodha.
- You can enter your details for the IPO issue in two ways, either using the Kite app or the Kite website. Below you can find the steps you need to follow while applying for the IPO issue.
Kite App for Applying IPO:
You must enter the Kite App specifically designed to serve your purpose.
- Enter the Kite App and look for the Orders button and then Tap it.
- You must tap on the IPO and then select the concerned IPO from the list of IPOs and then tap on the Apply button.
- You must tap on the Apply button again and then enter the UPI ID.
- You must enter or edit the quantity and the price.
- You must go through the undertaking information and tick the box then swipe the submit button.
- You must accept the mandate on the UPI app.
Kite Web for Applying the IPO Issue:
- Enter the Zerodha website and visit the link page: kite.zerodha.com/orders/ipo and then click the apply button.
- You must select the investor type and then make an entry of the UPI ID.
- You must enter the quantity and price.
- The quantity must be entered in the multiple of the lot size, and the price should fall within the price range of the issue.
- You must go through the undertaking and click the checkbox and then click the submit button.
- You must accept the mandate on the UPI app. This mandate shall be in acceptance from 10 AM on the opening day of the IPO issue to 5 PM on the closing day of the IPO issue.
Information on Acceptance/Rejection of your IPO Application:
By the end of the Closing day of the IPO, the exchange shall deliver an SMS that stands as confirmation of the submission of your IPO application.
However, you can approach the verification link that provides information on your bid details, and it is ipobidverify.nseindia.com/products/dynaContent/equities/ipos/ipo_login.jsp.
Reasons for IPO Application Rejection:
You must be careful while applying for the IPO because you must apply for IPO through your NRE/NRO bank account UPI only.
Any other bank account would fail to map the right UPI ID thus resulting in a rejection of the IPO application.
Bidding Conditions @ IPO
Below you will find the disclosure of an example that details the bidding conditions and the action taken by your banker upon your NRE/NRO account while making UPI ID payments.
You must be cautious in filling the bid proposals which can be up to 3 and be mindful that the NRE/NRO account has sufficient funds that are equal to the maximum bid value out of the 3 bids.
|Bid Number||Number of Shares||Price per Share||Bid Amount|
Issue Price Eligible Bid:
If the price range of the IPO is between ₹ 100 and ₹ 105 then you can bid at three respective prices. As per your eligibility, you may have administered three bids at three different prices per share (₹ 102, ₹ 101, ₹ 105) and the number of shares ( 10,150,50) correspondingly. Then the eligible bid will be in this order.
- ₹103 or higher Bid 3
- ₹102 Bid 3 (larger quantity between bids 1 and 3)
- ₹100 Bid 2 (largest quantity among bids 1,2, and 3)
Your NRE/NRO account shall block your maximum bid value of the lot until the share allocation is complete.
If your bid remains unselected for the IPO issue then the amount shall be released later. In the above example, the amount blocked for the IPO allotment would be ₹15,150 which is the highest of the three bids.
Check up for Future Public Offers (FPOs):
You can get to know the information on upcoming IPOs parked at the Zerodha website, so feel safe and visit @zerodha.com/ipo.
Web Link for Support Services @Zerodha
For queries, you can visit: support.zerodha.com/category/console/ipo for other IPO-related queries.
What is the Purpose of ASBA?
- Application Supported by Blocked Amount (ASBA) comes into play when you want to apply for Initial Public Offerings (IPO) or Follow-on Public Offerings ( FPOs) in India.
- While applying for the IPO, you will need to use ASBA if your NRE/NRO bank account is not in compliance with UPI.
- The application money for the IPO shall be held by your banker and the money will be temporarily blocked until the process of share allotment of an IPO is complete.
- If the company allots shares through the IPO process then your banker shall debit the amount for those allocated lot/lots and the money other than is unblocked or released for your future usage.
- To apply this process, the investor (you) will have to submit the ASBA application form to the self-certified syndicate bank.