Glossary
What is IPO and ASBA / UPI Mandate? Meaning, Example & Why It Matters
Applying for a new share issue, where your money is blocked in your bank account via ASBA or a UPI mandate until allotment.
An IPO, or initial public offering, is when a company sells shares to the public for the first time before listing on an exchange. Retail investors apply through their broker, bank or the exchange platforms. Under ASBA (Application Supported by Blocked Amount), your application money is blocked, not debited, in your bank account until shares are allotted.
Why IPO and ASBA / UPI Mandate matters to you
For retail applications through brokers, the UPI mandate is the most common route. After you apply, you receive a request in your UPI app to approve blocking the amount. If you get an allotment, only the amount for allotted shares is debited; the rest is unblocked. If you get no allotment, the full amount is released.
Many brokers do not charge for IPO applications, but check whether any fee applies. Remember that applying does not guarantee shares, especially in heavily oversubscribed issues where allotment is by lottery. Listing day prices can be well below the issue price, so IPOs carry real risk.
Practical tip: approve the UPI mandate before the deadline, otherwise your application will not be valid. Make sure your UPI ID is linked to the same bank account and name as your application, and read the company's offer document rather than relying on market buzz.
Example: Illustrative only: if you apply for one lot of an IPO costing ₹15,000, that amount is blocked in your bank account. If you receive no allotment, the full ₹15,000 is unblocked and remains yours.
See it in rupees: every charge and tax on a real trade, at every broker. Open the brokerage calculator
Related terms
- GlossaryDemat Account
An electronic account that holds your shares, ETFs, bonds and other securities in dematerialised form.
- GlossaryT+1 Settlement
A settlement cycle where trades are completed, with shares and money exchanged, one working day after the trade date.
- GlossaryETF (Exchange-Traded Fund)
A fund that holds a basket of assets, such as an index's stocks or gold, and trades on the exchange like a share.
Frequently asked questions
Is my money debited when I apply for an IPO?
No, under ASBA or UPI mandate it is only blocked. It is debited only if you receive an allotment.
What if I forget to approve the UPI mandate?
Your application will not be complete and will not be considered for allotment.
Do I need a demat account to apply for an IPO?
Yes, allotted shares are credited to your demat account, so you need one to apply.