What Is IPO Allotment? Basis of Allotment, Rules & How Status Is Calculated
Praveen Dubey (SEBI Registered RA)
SP RESEARCHVIA PVT. LTD. (INH000015808)
What is IPO allotment? IPO allotment is the official procedure where a company and its registrar allocate shares to investors who submitted bids during an Initial Public Offering. Under SEBI regulations, when retail categories are oversubscribed, allotment is determined through a computerized proportional lottery ensuring maximum successful unique applicants receive at least one minimum lot, followed by fund debit or UPI mandate release.
What Is ipo Allotment? Meaning & T+3 Timeline Mechanics
When an Indian corporation issues equity shares to the public through an Initial Public Offering (IPO), the bidding window remains open for three to four working days. Following the close of the issue, the designated Registrar to the Issue—such as Link Intime, KFin Technologies, or Bigshare Services—processes the bids to determine share distribution.
Under SEBI's streamlined T+3 listing framework, the entire timeline from the close of the IPO (T-day) to listing on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) takes exactly three working days:
- Day T (Bidding Close): Last day for submitting bids and approving UPI mandates by 5:00 PM IST.
- Day T+1 (Basis of Allotment): Registrars validate PAN numbers, eliminate invalid/multiple applications, and finalize the official Basis of Allotment with stock exchanges.
- Day T+2 (Demat Credit & Unblocking): Allocated shares are credited to successful bidders' demat accounts (CDSL / NSDL), while unsuccessful bidders receive bank notifications unblocking frozen UPI funds.
- Day T+3 (Exchange Listing): Trading commences on NSE and BSE at 10:00 AM IST following the 9:00 AM pre-open price discovery session.
How the Basis of Allotment Is Calculated for Different Categories
SEBI ICDR Regulations establish distinct allotment rules depending on the investor category:
| Category | Investment Limit | Allotment Rule When Oversubscribed |
|---|---|---|
| Retail Individual Investors (RII) | Up to ₹2,00,000 | Computerized lottery system. Total retail lots available are distributed such that maximum unique successful applicants receive 1 minimum lot. Applying for multiple lots does not increase odds. |
| Small NII (sNII / HNI) | ₹2,00,001 to ₹10,00,000 | Proportional lottery ensuring successful applicants receive at least the minimum NII ticket lot (valued around ₹2 Lakhs). |
| Big NII (bNII / HNI) | Above ₹10,00,000 | Proportional lottery system similar to sNII, ensuring minimum baseline allotment across unique PANs. |
| Qualified Institutional Buyers (QIB) | Mutual funds, FPIs, banks | Proportionate allotment based strictly on bidding value and merchant banker discretion for Anchor Book. |
Worked Example: Retail Allotment Probability in a 12x Oversubscribed IPO
Consider an IPO with an issue price of ₹500 and a minimum lot size of 30 shares (minimum lot value = ₹15,000). Assume the retail quota has 1,00,000 shares available, translating to:
Total Retail Lots Available = 1,00,000 shares / 30 shares per lot = 3,333 lots
Total Unique Retail Applications Received = 40,000 applicants
Retail Subscription = 40,000 / 3,333 = 12x oversubscription
Allotment Probability = 3,333 / 40,000 = 8.33% (or ~1 in every 12 applicants)
In this scenario, a computerized randomized lottery run by the registrar under the supervision of stock exchange representatives selects exactly 3,333 unique PANs out of the 40,000 applicants. Each winner receives exactly 1 lot (30 shares).
How to Check IPO Allotment Status Online (Step-by-Step)
Investors can verify their allotment status across three official channels:
Method 1: Official Registrar Website (Fastest)
Visit the registrar's official portal (e.g., Link Intime or KFin Technologies). Select the company from the dropdown menu, select PAN, enter your 10-digit PAN number, and click Search. The portal displays shares applied, shares allotted, and refund status.
Method 2: BSE Official Portal
Navigate to bseindia.com/investors/appli_check.aspx. Select Issue Type as Equity, select Issue Name, enter your Application Number or PAN, and verify the captcha to check allotment confirmation.
Method 3: Bank Account / Demat Notification
If successful, your bank will send an SMS debit notification for the exact allotted amount, and your depository (CDSL / NSDL) will email a credit confirmation. If unsuccessful, your bank sends an SMS indicating UPI mandate release.
Common Reasons for Application Rejection
- Multiple Bids Under Same PAN: Submitting bids from two different broker accounts using the same PAN causes both applications to be flagged and disqualified.
- Failed UPI Mandate Authorization: Placing a bid through a trading app without authorizing the UPI mandate in your payment app before 5:00 PM on closing day.
- Name Mismatch: Bank account holder name not matching the Demat account PAN. Third-party IPO applications are banned by SEBI.
- Bidding Below Floor Price: Selecting a price lower than the lower threshold of the issue price band.
Frequently Asked Questions
What is IPO allotment?
IPO allotment is the formal administrative and regulatory procedure where a company and its registrar allocate equity shares to bidders who applied during an Initial Public Offering based on official subscription rules approved by stock exchanges.
How is retail allotment determined when an IPO is heavily oversubscribed?
Under SEBI ICDR Regulations, when the retail individual investor (RII) quota is oversubscribed, allotment is determined via a computerized lottery system where maximum eligible unique applicants are allotted at least one minimum bid lot. Bidding for multiple lots does not increase lottery odds in oversubscribed retail tranches.
What is the Basis of Allotment document?
The Basis of Allotment is an official regulatory document published by the IPO registrar and stock exchanges outlining total valid bids received, rejection figures, subscription ratios across investor categories, and the exact allotment formula applied.
When are UPI mandates unblocked if I do not receive an allotment?
Under India's T+3 listing framework, UPI mandates for non-allottees are generally unblocked within 1 to 2 working days following the finalization of the Basis of Allotment.
Can multiple applications from different bank accounts for the same PAN get allotment?
No. SEBI mandates that only one valid application per PAN is permitted in an IPO. Submitting multiple bids using different bank accounts or brokers under the same PAN results in automatic rejection of all bids by the registrar.
Key Takeaways for IPO Applicants
- In oversubscribed retail issues, bidding 1 lot per unique family member PAN is mathematically superior to bidding multiple lots on a single PAN.
- Always select the Cut-Off Price when applying in the retail category to prevent disqualification during price discovery.
- Approve the UPI mandate immediately after submitting the bid and verify the lien status on your banking app.
- Track registrar portals directly on T+1 for real-time allotment status before exchange listing.
Written by Praveen Dubey
Chief Research Analyst | SEBI Reg: INH000015808
Statutory Warning & Risk Disclaimer: Investment in securities market is subject to market risks. Read all related documents carefully before investing. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Content provided on this blog is for informational and educational purposes only.