UPI-Based IPO Application
The UPI-based IPO application mechanism allows retail investors to apply for IPOs through their stockbroker or third-party platforms by authorising a payment block on their bank account using a UPI ID (Virtual Payment Address), eliminating the need to apply directly at a Self-Certified Syndicate Bank (SCSB) branch.
SEBI introduced the UPI (Unified Payments Interface) based IPO application process in phases between 2019 and 2021, transforming retail IPO participation by leveraging India's widely adopted UPI payments infrastructure. Before the UPI route, retail investors could apply online only through the internet banking portals of SCSB banks — which meant that investors banking with non-SCSB banks or those who preferred applying through their brokers had to visit a physical branch. The UPI mechanism removed this friction entirely.
The UPI-based IPO application process works as follows. The investor applies for the IPO through their stockbroker's platform, a third-party investment app (such as Zerodha, Groww, Paytm Money, or similar platforms), or the stock exchange's mobile app. During the application process, the investor provides their UPI ID (Virtual Payment Address or VPA) instead of their bank account and SCSB details. The application is transmitted to the stock exchange, which then sends a payment block mandate request to the investor's UPI handle through their UPI service provider (typically their bank's UPI app — BHIM, PhonePe, Google Pay, or the bank's proprietary app).
The investor then receives a notification on their UPI-linked bank app — typically within two to four hours of submitting the application — requesting them to approve the block mandate. Upon approval by the investor, the specified application amount is blocked in their bank account. This block is not a debit; the funds continue to earn interest and are visible in the account, but cannot be spent below the blocked threshold. The block mandate approval is time-sensitive: SEBI has specified that the mandate must be approved by the investor before the close of the bidding period.
If the investor fails to approve the block mandate within the stipulated time, the application is treated as incomplete and is liable to be rejected at the time of technical verification. This is a common cause of application failures, particularly for investors who are unfamiliar with the mandate approval step or who do not receive the push notification promptly. Investors are advised to check their UPI app actively after submitting an IPO application rather than waiting for a notification.
Post-allotment, the process is the same as standard ASBA: the blocked amount is debited from the accounts of successful allottees and released for unsuccessful or partially allotted applicants. The UPI limit for IPO applications was enhanced by SEBI and NPCI from Rs 2 lakh to Rs 5 lakh per application in 2021, enabling retail investors to apply for a larger number of lots within the retail category. This enhancement was particularly relevant for IPOs with higher lot sizes or where retail investors wished to maximise their application amount to improve allotment probability in oversubscribed issues.