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- IPO Share Allotment Process - Hindi - IPO में Shares कैसे Allot होते हैं ?
- What is the difference between Cut off and bidding price in IPO?
- Sebi allows retail to bid at cut-off price in OFS
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- Book Building Process - How Are Prices of Shares Decided in an IPO ?
- Cut off price and bid price in ipo
The Initial Public Offering (IPO) Process is where a previously unlisted company sells new or existing securities and offers them to the public for the first time. After an IPO, the issuing company becomes a publically listed company on a recognized stock exchange. Thus, an IPO is also commonly known as "going public".
If a company that is already listed (has its shares for buying and selling on the stock exchange) is coming out with a fresh issue of shares, it is called the new issue.
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You should have Internet enabled accounts with State Bank of India, with transaction rights and have a Demat account with any Depository Participants (DPs). You need to be a resident Indian individual.
The investor can:
- be from any of the approved categories eligible to apply for IPO, as per SEBI Guidelines
- have a Demat account with any Depository Participants (DPs) along with a valid Permanent Account Number (PAN)
- maintain a Savings Bank or Current account with SBI (excluding overdraft or loan account)
- have sufficient clear credit balance in his/her Savings Bank or Current account (without Overdraft Limit/ Loan) to block funds to the extent of application money.
i.e. the application amount is blocked only against/ in the funded deposit account and that clear demarcated funds are available for ASBA applications. The total bid amount for the IPO application will remain locked until the allotment is done.
The investor cannot utilize the amount during the locked period.
- apply only at cut off price which is the higher of the bid price
ASBA means "Application Supported by Blocked Amount".
More IPO Terms / Definitions ...
ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
Application Supported by Blocked Amount (ASBA) is an application made by an investor, containing an authorization to Self-Certified Syndicate Bank (SCSB) to block funds available in applicant's Savings Bank Account or Current Account (other than OD), for subscribing to an Issue, to the extent of application money, till finalisation of allotment in the issue or till withdrawal/ failure of issue, or till withdrawal/ rejection of application, as the case may be.
Under ASBA, funds blocked in the account, will continue to earn interest during the application processing period, if held in an interest-bearing account.
Bank will mark a lien on the deposit account of the investor to the extent of the application money. The hold on the account will be removed after finalization of the basis of allotment.
- The process of allocating funds for IPO is made simple and easy.
- You do not have to visit the designated Branch for submitting the application form.
- While applying for IPO through onlinesbi.com the amount will be debited from your bank account to the extent of successful allotment ONLY at the time of allotment.
- Until such allotment, the amount will remain blocked in your SBI account.
- The funds blocked in the account, will continue to earn interest during the entire IPO application processing period, if held in an interest-bearing account
The following categories can apply through ASBA process
Through Retail Internet Banking:
- Retail Individual Investors
Through Corporate Internet Banking:
- FIIs other than Individuals or Corporate
- Mutual Funds
- Insurance Company
- Banks and FIs
- Other QIBs
- Bodies Corporate
- NII - others (All entities other than QIBs, Bodies Corporate and Individuals)
IPO Share Allotment Process - Hindi - IPO में Shares कैसे Allot होते हैं ?
You can verify the status of your application in the IPO History link (onlinesbi.com >> e-Services >> Demat Services and ASBA Services >> IPO (Equity) >> IPO History.
The history page displays the Reference number, Name of the Company, Application date, Lien Mark Amount and Lien Mark Status.
The IPO issuing company decides the floor and cap price.
These values are decided by the company issuing IPO.
- Depository : A depository can be compared to a bank.
A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form.
Besides holding securities, a depository also provides services related to transactions in securities. There are two main depositories in India, namely, a) National Securities Depository Ltd. (NSDL) and b) Central Depository Securities Ltd. (CDSL), both of which are regulated by SEBI.
- Depository Participant : A Depository Participant is the registered agent of the depository concerned and it is through the DP that an investor gets the services of a depository.
To avail this service, one has to open a Depository Account with the DP. Banks, financial institutions and stock brokers are acting as Depository Participants after obtaining the required approval from SEBI and complying with other statutory requirements.
What is the difference between Cut off and bidding price in IPO?
The Depository Participant manages all transactions on your Demat account and provides an ebroking ID or client ID to identify your relationship with the DP.
- DP ID : This is the Depository Participant ID with whom your demat account is maintained. It is 8-character starting with 'IN'. This is applicable for NSDL only.
- Client ID : This is your 8-digit demat account number. This is applicable for NSDL only.
- Beneficiary DP account number : It is the 16-digit demat account number.
This is applicable for CDSL only.
Once an application is accepted, the Registrar to the Issue and Share Transfer Agent (RTA) will communicate with you by POST, Email etc.
Sebi allows retail to bid at cut-off price in OFS
regarding the allotment of shares in your name.
Rejection will be communicated to you by RTA.
The bid value which was blocked will be released by SBI.
Applying through ASBA process has the following advantages:
- The investor need not pay the application money by cheque, instead the investor submits ASBA which accompanies an authorization to block the bank account to the extent of the application money.
- The investor continues to earn interest on the application money , if it is held in an interest-bearing account as the funds remains with the bank .
- The investor does not have to bother about refunds, as in ASBA only that much money which is required for allotment of securities, is taken from the bank account, when his application is selected for allotment, after the basis of allotment is finalized.
With effect from 01.01.2016 SEBI has made it mandatory for submission of applications for all Public Issues of equity shares through ASBA route.
Self Certified Syndicate Bank (SCSB) is a bank which offers the facility of applying through the ASBA process.
ASBA can be accepted only by SCSBs, whose names appear in the list of SCSBs displayed in SEBI"s website at www.sebi.gov.in
Application for subscribing to a public issue can be through the following channels, with ASBA as the sole mechanism for making payment:
- Submission of application form physically at the branch, i.e.
- Submission of physical application with any of the intermediary/ broker.
Book Building Process - How Are Prices of Shares Decided in an IPO ?
The ASBA forms of investors having account with SBI are submitted by broker/ intermediaries to the designated Syndicate ASBA Branches for marking hold on specified deposit account in the ASBA form, to the extent of application money.
- Submission of application by the investor through online platform, provided by the investor's Bank (login to INB PORTAL -https://www.onlinesbi.com through his / her login)
You can apply for a maximum of three bids per application.However,only one bid can be made if applying at cut-off price.
No. You can apply for an IPO only once with the same PAN.
You can submit only 5 applications for the same IPO from one account, in different names.
Retail Individual Investors (Individual and HUF investor applying up to Rs.200,000/-, net of discount) are permitted to either withdraw or revise their bids at entire bidding stage, i.e.
only till the closure of bid period.
Qualified Institutional Buyers and Non-Institutional Bidders) can neither withdraw the bid nor lower the size of their bids at any stage.
Cut off price and bid price in ipo
For these categories, only upward revision will be allowed.
- For new requests, lien will be marked for the highest bid amount.
- For upward revision of bids, lien will be marked for the highest bid amount.
- For downward revision of bids, the existing lien will not be removed.
It will be removed only after allotment.
If ALL bids under an application submitted directly to the Bank/ bid online, are withdrawn/deleted during the bidding period by the Retail Individual Investor, the Bank deletes the bid and unblocks the application money in the bank account.
However, if the withdrawal/ deletion is made after the bid closure date, the Bank will unblock the application money only after getting appropriate instruction from Registrar, which is after the finalisation of basis of allotment of the issue.
Please Note: The terms and procedures mentioned is subject to change in adherence to the rules, regulations and procedure notified by SEBI from time to time.