Who Can Apply for an IPO?
One of the most important — and most misunderstood — aspects of the Indian IPO system is its category structure. Unlike a regular stock purchase where you just place a buy order, IPO applications are divided into distinct investor categories, each with different rules, reservation quotas, and minimum application sizes.
Understanding which category you fall into, and what that means for your allotment probability, is fundamental to building an effective IPO strategy.
The Three Investor Categories
1. Retail Individual Investors (RII)
This is where most readers of this book belong. SEBI defines a retail investor as any individual (resident Indian or eligible NRI) whose total application value in a single IPO does not exceed ₹2 lakh.
Reservation: At least 35% of shares in a book-built IPO must be reserved for retail investors.
Minimum application: One lot (varies by IPO, but SEBI requires the minimum lot to be priced between ₹10,000 and ₹15,000 for mainboard IPOs).
Allotment method in oversubscribed IPOs: Lottery. Every retail applicant who applies for exactly one lot gets an equal chance in the draw, regardless of application size — up to a point. This is a deliberate democratisation by SEBI.
Key advantage: The lottery system means applying for exactly one lot gives you the same allotment probability as applying for 13 lots. Applying for multiple lots only increases your chances marginally (you get more entries in the lottery for higher lot applications, but the system favours minimum-lot applicants).
2. Non-Institutional Investors (NII) / High Net Worth Individuals (HNI)
Any individual applicant whose application exceeds ₹2 lakh automatically falls into the NII or HNI category. This includes both resident Indians and NRIs applying for amounts above the retail threshold.
Reservation: At least 15% of shares are reserved for this category.
Allotment method: Proportional — not a lottery. If the HNI category is subscribed 100x and you applied for ₹10 lakh worth of shares, you receive approximately ₹10,000 worth. This makes HNI applications less capital-efficient in heavily oversubscribed IPOs.
Sub-categories introduced by SEBI (2022): SEBI split the NII category into two sub-buckets:
- sNII (small NII): Applications between ₹2 lakh and ₹10 lakh (1/3rd of NII quota)
- bNII (big NII): Applications above ₹10 lakh (2/3rd of NII quota)
This was introduced to prevent very large HNI applications from crowding out smaller non-institutional applicants.
3. Qualified Institutional Buyers (QIB)
QIBs are large institutional investors — mutual funds, foreign institutional investors (FIIs), insurance companies, banks, and similar entities registered with SEBI.
Reservation: At least 50% of shares in a book-built IPO are reserved for QIBs.
Allotment method: Proportional to bids placed.
Anchor investors: Up to 60% of the QIB portion can be allocated to anchor investors — large institutions that bid before the IPO opens. Anchor allocations signal institutional confidence in the issue and are disclosed publicly before the IPO opens to retail investors.
What You Need to Apply
Regardless of category, every IPO applicant in India needs three things:
1. A PAN card Your Permanent Account Number is mandatory. It is your unique identifier across all financial transactions in India. Without a PAN, you cannot apply for an IPO.
2. A Demat account A dematerialised account holds your shares in electronic form. You need a demat account with a SEBI-registered Depository Participant (DP) — either NSDL or CDSL. Most brokers (Zerodha, Groww, Angel One, Upstox, etc.) open demat accounts as part of their onboarding.
3. A linked bank account Your bank account must be linked to your demat account and UPI ID (or enabled for ASBA) to block the application amount.
That is it. No minimum income, no net worth threshold (for retail category), no age restriction beyond being a major (18+). Any Indian resident with these three things can apply for a mainboard IPO.
Can NRIs Apply?
Yes. Non-Resident Indians can apply for IPOs in India, subject to conditions:
- NRIs must apply on a non-repatriation basis using NRO account funds, or on a repatriation basis using NRE/FCNR funds
- Applications up to ₹2 lakh qualify for the retail category; above that, they fall under HNI
- NRIs using UPI must have a UPI handle linked to an NRE/NRO account
Some IPOs restrict NRI participation due to foreign ownership regulations in their sector. Always check the RHP for NRI applicability.
Can Minors Apply?
No. A minor cannot hold a demat account in their own name. However, a guardian can hold shares in a minor's name through a guardian demat account. Once the minor turns 18, the account converts to a regular demat account.
One PAN, One Application
SEBI is strict about this: one PAN can submit only one application per IPO. Applying multiple times using the same PAN — through different brokers, different bank accounts — results in all applications being rejected.
However, different family members can each apply with their own PANs. It is entirely legitimate for a husband, wife, and adult children to each submit separate applications for the same IPO — effectively increasing the household's allotment chances.
This is a legal and widely practised strategy. Each application must use a different PAN, different demat account, and different bank account.
Employee and Shareholder Reservations
Many IPOs include additional reserved categories:
Employee reservation: Employees of the company (and sometimes its subsidiaries) get a reserved portion, often at a discount of ₹10–₹50 to the issue price.
Shareholder reservation: If the IPO is for a subsidiary of a listed company, existing shareholders of the parent company may get a reserved quota. For example, the Bajaj Housing Finance IPO had a reservation for Bajaj Finance shareholders.
These reserved portions are separate from the retail/HNI/QIB quotas and can be applied for in addition to a regular retail application.